Correlation Between Constellation Software and Centerra Gold
Can any of the company-specific risk be diversified away by investing in both Constellation Software and Centerra Gold 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 Software and Centerra Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellation Software and Centerra Gold, you can compare the effects of market volatilities on Constellation Software and Centerra Gold 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 Software with a short position of Centerra Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Software and Centerra Gold.
Diversification Opportunities for Constellation Software and Centerra Gold
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Constellation and Centerra is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and Centerra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerra Gold and Constellation Software 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 Software are associated (or correlated) with Centerra Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerra Gold has no effect on the direction of Constellation Software i.e., Constellation Software and Centerra Gold go up and down completely randomly.
Pair Corralation between Constellation Software and Centerra Gold
Assuming the 90 days trading horizon Constellation Software is expected to generate 0.53 times more return on investment than Centerra Gold. However, Constellation Software is 1.89 times less risky than Centerra Gold. It trades about 0.13 of its potential returns per unit of risk. Centerra Gold is currently generating about 0.03 per unit of risk. If you would invest 208,770 in Constellation Software on September 12, 2024 and sell it today you would earn a total of 253,784 from holding Constellation Software or generate 121.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Software vs. Centerra Gold
Performance |
| Timeline |
| Constellation Software |
| Centerra Gold |
Constellation Software and Centerra Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Software and Centerra Gold
The main advantage of trading using opposite Constellation Software and Centerra Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Software position performs unexpectedly, Centerra Gold 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 Centerra Gold will offset losses from the drop in Centerra Gold's long position.| Constellation Software vs. Apple Inc CDR | Constellation Software vs. NVIDIA CDR | Constellation Software vs. Microsoft Corp CDR | Constellation Software vs. Amazon CDR |
| Centerra Gold vs. Alamos Gold | Centerra Gold vs. NovaGold Resources | Centerra Gold vs. Eldorado Gold Corp | Centerra Gold vs. IAMGold |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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