Correlation Between CONSTELLATION and Lakeland Industries

Can any of the company-specific risk be diversified away by investing in both CONSTELLATION and Lakeland Industries at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CONSTELLATION and Lakeland Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CONSTELLATION BRANDS INC and Lakeland Industries, you can compare the effects of market volatilities on CONSTELLATION and Lakeland Industries and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CONSTELLATION with a short position of Lakeland Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CONSTELLATION and Lakeland Industries.

Diversification Opportunities for CONSTELLATION and Lakeland Industries

0.44

Correlation Coefficient

CONSTELLATION  Lakeland Industries

Very weak diversification

The 3 months correlation between CONSTELLATION and Lakeland is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CONSTELLATION BRANDS INC and Lakeland Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Industries and CONSTELLATION is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CONSTELLATION BRANDS INC are associated (or correlated) with Lakeland Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Industries has no effect on the direction of CONSTELLATION i.e., CONSTELLATION and Lakeland Industries go up and down completely randomly.

Pair Corralation between CONSTELLATION and Lakeland Industries

Assuming the 90 days trading horizon CONSTELLATION is expected to generate 54.83 times less return on investment than Lakeland Industries. But when comparing it to its historical volatility, CONSTELLATION BRANDS INC is 8.54 times less risky than Lakeland Industries. It trades about 0.01 of its potential returns per unit of risk. Lakeland Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,398  in Lakeland Industries on October 21, 2024 and sell it today you would earn a total of  1,206  from holding Lakeland Industries or generate 86.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.76%
Values	Daily Returns

CONSTELLATION BRANDS INC  vs.  Lakeland Industries

CONSTELLATION BRANDS INC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CONSTELLATION BRANDS INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CONSTELLATION is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Lakeland Industries

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lakeland Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, Lakeland Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CONSTELLATION and Lakeland Industries

The main advantage of trading using opposite CONSTELLATION and Lakeland Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CONSTELLATION position performs unexpectedly, Lakeland Industries can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lakeland Industries will offset losses from the drop in Lakeland Industries' long position.

The idea behind CONSTELLATION BRANDS INC and Lakeland Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.