Correlation Between CCL Industries and Constellation Software
Can any of the company-specific risk be diversified away by investing in both CCL Industries and Constellation Software 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 CCL Industries and Constellation Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CCL Industries and Constellation Software, you can compare the effects of market volatilities on CCL Industries and Constellation Software 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 CCL Industries with a short position of Constellation Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and Constellation Software.
Diversification Opportunities for CCL Industries and Constellation Software
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CCL and Constellation is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and Constellation Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Software and CCL Industries 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 CCL Industries are associated (or correlated) with Constellation Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Software has no effect on the direction of CCL Industries i.e., CCL Industries and Constellation Software go up and down completely randomly.
Pair Corralation between CCL Industries and Constellation Software
Assuming the 90 days trading horizon CCL Industries is expected to generate 2.63 times less return on investment than Constellation Software. In addition to that, CCL Industries is 1.02 times more volatile than Constellation Software. It trades about 0.04 of its total potential returns per unit of risk. Constellation Software is currently generating about 0.09 per unit of volatility. If you would invest 233,048 in Constellation Software on October 13, 2024 and sell it today you would earn a total of 194,499 from holding Constellation Software or generate 83.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
CCL Industries vs. Constellation Software
Performance |
| Timeline |
| CCL Industries |
| Constellation Software |
CCL Industries and Constellation Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CCL Industries and Constellation Software
The main advantage of trading using opposite CCL Industries and Constellation Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CCL Industries position performs unexpectedly, Constellation Software 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 Software will offset losses from the drop in Constellation Software's long position.| CCL Industries vs. CCL Industries | CCL Industries vs. Quebecor | CCL Industries vs. Winpak | CCL Industries vs. Restaurant Brands International |
| Constellation Software vs. Kinaxis | Constellation Software vs. Open Text Corp | Constellation Software vs. Enghouse Systems | Constellation Software vs. CGI Inc |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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