Correlation Between Constellation Software and International Metals
Can any of the company-specific risk be diversified away by investing in both Constellation Software and International Metals 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 International Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellation Software and International Metals Mining, you can compare the effects of market volatilities on Constellation Software and International Metals 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 International Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Software and International Metals.
Diversification Opportunities for Constellation Software and International Metals
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Constellation and International is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and International Metals Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Metals 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 International Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Metals has no effect on the direction of Constellation Software i.e., Constellation Software and International Metals go up and down completely randomly.
Pair Corralation between Constellation Software and International Metals
Assuming the 90 days trading horizon Constellation Software is expected to under-perform the International Metals. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Software is 2.56 times less risky than International Metals. The stock trades about -0.22 of its potential returns per unit of risk. The International Metals Mining is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 8.00 in International Metals Mining on October 12, 2024 and sell it today you would lose (0.50) from holding International Metals Mining or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Constellation Software vs. International Metals Mining
Performance |
| Timeline |
| Constellation Software |
| International Metals |
Constellation Software and International Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Software and International Metals
The main advantage of trading using opposite Constellation Software and International Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Software position performs unexpectedly, International Metals 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 International Metals will offset losses from the drop in International Metals' long position.| Constellation Software vs. Kinaxis | Constellation Software vs. Open Text Corp | Constellation Software vs. Enghouse Systems | Constellation Software vs. CGI Inc |
| International Metals vs. Verizon Communications CDR | International Metals vs. Nova Leap Health | International Metals vs. Champion Iron | International Metals vs. UnitedHealth Group CDR |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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