Correlation Between Constellation Software and Swatch Group
Can any of the company-specific risk be diversified away by investing in both Constellation Software and Swatch Group 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 Swatch Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellation Software and The Swatch Group, you can compare the effects of market volatilities on Constellation Software and Swatch Group 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 Swatch Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Software and Swatch Group.
Diversification Opportunities for Constellation Software and Swatch Group
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Constellation and Swatch is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and The Swatch Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group 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 Swatch Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group has no effect on the direction of Constellation Software i.e., Constellation Software and Swatch Group go up and down completely randomly.
Pair Corralation between Constellation Software and Swatch Group
Assuming the 90 days trading horizon Constellation Software is expected to under-perform the Swatch Group. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Software is 1.05 times less risky than Swatch Group. The stock trades about -0.27 of its potential returns per unit of risk. The The Swatch Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 810.00 in The Swatch Group on October 16, 2024 and sell it today you would lose (10.00) from holding The Swatch Group or give up 1.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.75% |
| Values | Daily Returns |
Constellation Software vs. The Swatch Group
Performance |
| Timeline |
| Constellation Software |
| Swatch Group |
Constellation Software and Swatch Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Software and Swatch Group
The main advantage of trading using opposite Constellation Software and Swatch Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Software position performs unexpectedly, Swatch Group 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 Swatch Group will offset losses from the drop in Swatch Group's long position.| Constellation Software vs. Perseus Mining Limited | Constellation Software vs. Kingdee International Software | Constellation Software vs. Aya Gold Silver | Constellation Software vs. Endeavour Mining PLC |
| Swatch Group vs. OPERA SOFTWARE | Swatch Group vs. ASURE SOFTWARE | Swatch Group vs. Constellation Software | Swatch Group vs. AOYAMA TRADING |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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