Correlation Between CONSTELLATION and Kite Realty

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

Diversification Opportunities for CONSTELLATION and Kite Realty

0.21

Correlation Coefficient

CONSTELLATION  Kite Realty

Modest diversification

The 3 months correlation between CONSTELLATION and Kite is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CONSTELLATION BRANDS INC and Kite Realty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kite Realty Group 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 Kite Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kite Realty Group has no effect on the direction of CONSTELLATION i.e., CONSTELLATION and Kite Realty go up and down completely randomly.

Pair Corralation between CONSTELLATION and Kite Realty

Assuming the 90 days trading horizon CONSTELLATION BRANDS INC is expected to generate 0.16 times more return on investment than Kite Realty. However, CONSTELLATION BRANDS INC is 6.37 times less risky than Kite Realty. It trades about -0.36 of its potential returns per unit of risk. Kite Realty Group is currently generating about -0.28 per unit of risk. If you would invest  9,344  in CONSTELLATION BRANDS INC on October 5, 2024 and sell it today you would lose (128.00) from holding CONSTELLATION BRANDS INC or give up 1.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

CONSTELLATION BRANDS INC  vs.  Kite Realty Group

CONSTELLATION BRANDS INC

Risk-Adjusted Performance

0 of 100

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Kite Realty Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kite Realty Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kite Realty is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CONSTELLATION and Kite Realty

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

The idea behind CONSTELLATION BRANDS INC and Kite Realty Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.