Correlation Between Constellation Software and CI Financial
Can any of the company-specific risk be diversified away by investing in both Constellation Software and CI Financial 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 CI Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellation Software and CI Financial Corp, you can compare the effects of market volatilities on Constellation Software and CI Financial 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 CI Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Software and CI Financial.
Diversification Opportunities for Constellation Software and CI Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Constellation and CIX is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and CI Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Financial Corp 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 CI Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Financial Corp has no effect on the direction of Constellation Software i.e., Constellation Software and CI Financial go up and down completely randomly.
Pair Corralation between Constellation Software and CI Financial
Assuming the 90 days trading horizon Constellation Software is expected to generate 1.62 times less return on investment than CI Financial. But when comparing it to its historical volatility, Constellation Software is 1.86 times less risky than CI Financial. It trades about 0.12 of its potential returns per unit of risk. CI Financial Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 951.00 in CI Financial Corp on September 20, 2024 and sell it today you would earn a total of 2,117 from holding CI Financial Corp or generate 222.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Software vs. CI Financial Corp
Performance |
| Timeline |
| Constellation Software |
| CI Financial Corp |
Constellation Software and CI Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Software and CI Financial
The main advantage of trading using opposite Constellation Software and CI Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Software position performs unexpectedly, CI Financial 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 CI Financial will offset losses from the drop in CI Financial's long position.| Constellation Software vs. Kinaxis | Constellation Software vs. Open Text Corp | Constellation Software vs. Enghouse Systems | Constellation Software vs. CGI Inc |
| CI Financial vs. IGM Financial | CI Financial vs. iA Financial | CI Financial vs. Canadian Western Bank | CI Financial vs. Great West Lifeco |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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