Correlation Between Cedar Realty and Constellation Brands

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Can any of the company-specific risk be diversified away by investing in both Cedar Realty and Constellation Brands 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 Cedar Realty and Constellation Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cedar Realty Trust and Constellation Brands Class, you can compare the effects of market volatilities on Cedar Realty and Constellation Brands 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 Cedar Realty with a short position of Constellation Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Realty and Constellation Brands.

Diversification Opportunities for Cedar Realty and Constellation Brands

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Cedar and Constellation is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and Constellation Brands Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Brands and Cedar Realty 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 Cedar Realty Trust are associated (or correlated) with Constellation Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Brands has no effect on the direction of Cedar Realty i.e., Cedar Realty and Constellation Brands go up and down completely randomly.

Pair Corralation between Cedar Realty and Constellation Brands

Assuming the 90 days trading horizon Cedar Realty Trust is expected to generate 2.22 times more return on investment than Constellation Brands. However, Cedar Realty is 2.22 times more volatile than Constellation Brands Class. It trades about 0.02 of its potential returns per unit of risk. Constellation Brands Class is currently generating about -0.16 per unit of risk. If you would invest  1,483  in Cedar Realty Trust on September 30, 2024 and sell it today you would earn a total of  23.00  from holding Cedar Realty Trust or generate 1.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cedar Realty Trust  vs.  Constellation Brands Class

 Performance 
       Timeline  
Cedar Realty Trust 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cedar Realty is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Constellation Brands 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Constellation Brands Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Cedar Realty and Constellation Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cedar Realty and Constellation Brands

The main advantage of trading using opposite Cedar Realty and Constellation Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Realty position performs unexpectedly, Constellation Brands 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 Constellation Brands will offset losses from the drop in Constellation Brands' long position.
The idea behind Cedar Realty Trust and Constellation Brands Class 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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