Correlation Between Pinterest and Constellation Brands

Can any of the company-specific risk be diversified away by investing in both Pinterest 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 Pinterest and Constellation Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pinterest and Constellation Brands Class, you can compare the effects of market volatilities on Pinterest 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 Pinterest with a short position of Constellation Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinterest and Constellation Brands.

Diversification Opportunities for Pinterest and Constellation Brands

-0.11

Correlation Coefficient

Pinterest  Constellation Brands

Good diversification

The 3 months correlation between Pinterest and Constellation is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and Constellation Brands Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Brands and Pinterest 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 Pinterest 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 Pinterest i.e., Pinterest and Constellation Brands go up and down completely randomly.

Pair Corralation between Pinterest and Constellation Brands

Given the investment horizon of 90 days Pinterest is expected to generate 1.97 times more return on investment than Constellation Brands. However, Pinterest is 1.97 times more volatile than Constellation Brands Class. It trades about 0.05 of its potential returns per unit of risk. Constellation Brands Class is currently generating about -0.06 per unit of risk. If you would invest  2,889  in Pinterest on September 14, 2024 and sell it today you would earn a total of  174.50  from holding Pinterest or generate 6.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Pinterest  vs.  Constellation Brands Class

Pinterest

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Pinterest may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Constellation Brands

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, Constellation Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pinterest and Constellation Brands

The main advantage of trading using opposite Pinterest and Constellation Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinterest 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 Pinterest 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.