Correlation Between Constellation Software and MCAN Mortgage
Can any of the company-specific risk be diversified away by investing in both Constellation Software and MCAN Mortgage 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 MCAN Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellation Software and MCAN Mortgage, you can compare the effects of market volatilities on Constellation Software and MCAN Mortgage 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 MCAN Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Software and MCAN Mortgage.
Diversification Opportunities for Constellation Software and MCAN Mortgage
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Constellation and MCAN is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and MCAN Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCAN Mortgage 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 MCAN Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCAN Mortgage has no effect on the direction of Constellation Software i.e., Constellation Software and MCAN Mortgage go up and down completely randomly.
Pair Corralation between Constellation Software and MCAN Mortgage
Assuming the 90 days trading horizon Constellation Software is expected to generate 1.73 times more return on investment than MCAN Mortgage. However, Constellation Software is 1.73 times more volatile than MCAN Mortgage. It trades about 0.17 of its potential returns per unit of risk. MCAN Mortgage is currently generating about 0.09 per unit of risk. If you would invest 444,491 in Constellation Software on November 1, 2024 and sell it today you would earn a total of 28,009 from holding Constellation Software or generate 6.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Software vs. MCAN Mortgage
Performance |
| Timeline |
| Constellation Software |
| MCAN Mortgage |
Constellation Software and MCAN Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Software and MCAN Mortgage
The main advantage of trading using opposite Constellation Software and MCAN Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Software position performs unexpectedly, MCAN Mortgage 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 MCAN Mortgage will offset losses from the drop in MCAN Mortgage's long position.| Constellation Software vs. Kinaxis | Constellation Software vs. Open Text Corp | Constellation Software vs. Enghouse Systems | Constellation Software vs. CGI Inc |
| MCAN Mortgage vs. Timbercreek Financial Corp | MCAN Mortgage vs. Atrium Mortgage Investment | MCAN Mortgage vs. Firm Capital Mortgage | MCAN Mortgage vs. First National Financial |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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