Correlation Between CONSTELLATION and Valneva SE

Can any of the company-specific risk be diversified away by investing in both CONSTELLATION and Valneva SE 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 Valneva SE 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 Valneva SE ADR, you can compare the effects of market volatilities on CONSTELLATION and Valneva SE 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 Valneva SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CONSTELLATION and Valneva SE.

Diversification Opportunities for CONSTELLATION and Valneva SE

-0.14

Correlation Coefficient

CONSTELLATION  Valneva SE

Good diversification

The 3 months correlation between CONSTELLATION and Valneva is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding CONSTELLATION BRANDS INC and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of CONSTELLATION i.e., CONSTELLATION and Valneva SE go up and down completely randomly.

Pair Corralation between CONSTELLATION and Valneva SE

Assuming the 90 days trading horizon CONSTELLATION BRANDS INC is expected to under-perform the Valneva SE. But the bond apears to be less risky and, when comparing its historical volatility, CONSTELLATION BRANDS INC is 14.33 times less risky than Valneva SE. The bond trades about -0.06 of its potential returns per unit of risk. The Valneva SE ADR is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  420.00  in Valneva SE ADR on December 26, 2024 and sell it today you would earn a total of  287.00  from holding Valneva SE ADR or generate 68.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

CONSTELLATION BRANDS INC  vs.  Valneva SE ADR

CONSTELLATION BRANDS INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days CONSTELLATION BRANDS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CONSTELLATION is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Valneva SE ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Valneva SE ADR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Valneva SE displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CONSTELLATION and Valneva SE

The main advantage of trading using opposite CONSTELLATION and Valneva SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CONSTELLATION position performs unexpectedly, Valneva SE 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 Valneva SE will offset losses from the drop in Valneva SE's long position.

The idea behind CONSTELLATION BRANDS INC and Valneva SE ADR 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .