Correlation Between Constellation Brands and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Constellation Brands and Coca Cola 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 Brands and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellation Brands Class and Coca Cola European Partners, you can compare the effects of market volatilities on Constellation Brands and Coca Cola 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 Brands with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Coca Cola.
Diversification Opportunities for Constellation Brands and Coca Cola
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Constellation and Coca is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class and Coca Cola European Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola European and Constellation Brands 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 Class are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola European has no effect on the direction of Constellation Brands i.e., Constellation Brands and Coca Cola go up and down completely randomly.
Pair Corralation between Constellation Brands and Coca Cola
If you would invest (100.00) in Coca Cola European Partners on January 21, 2024 and sell it today you would earn a total of 100.00 from holding Coca Cola European Partners or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Constellation Brands Class vs. Coca Cola European Partners
Performance |
| Timeline |
| Constellation Brands |
| Coca Cola European |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Constellation Brands and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Coca Cola
The main advantage of trading using opposite Constellation Brands and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| Constellation Brands vs. Vintage Wine Estates | Constellation Brands vs. Pernod Ricard SA | Constellation Brands vs. Pernod Ricard SA |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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