Correlation Between Constellation Software and Canagold Resources

Can any of the company-specific risk be diversified away by investing in both Constellation Software and Canagold Resources 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 Canagold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Constellation Software and Canagold Resources, you can compare the effects of market volatilities on Constellation Software and Canagold Resources 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 Canagold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Software and Canagold Resources.

Diversification Opportunities for Constellation Software and Canagold Resources

0.05

Correlation Coefficient

Constellation Software  Canagold Resources

Significant diversification

The 3 months correlation between Constellation and Canagold is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and Canagold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canagold Resources 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 Canagold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canagold Resources has no effect on the direction of Constellation Software i.e., Constellation Software and Canagold Resources go up and down completely randomly.

Pair Corralation between Constellation Software and Canagold Resources

Assuming the 90 days trading horizon Constellation Software is expected to generate 11.78 times less return on investment than Canagold Resources. But when comparing it to its historical volatility, Constellation Software is 2.59 times less risky than Canagold Resources. It trades about 0.01 of its potential returns per unit of risk. Canagold Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Canagold Resources on October 22, 2024 and sell it today you would earn a total of  1.00  from holding Canagold Resources or generate 3.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Constellation Software  vs.  Canagold Resources

Constellation Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Constellation Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Constellation Software is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Canagold Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canagold Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Canagold Resources may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Constellation Software and Canagold Resources

The main advantage of trading using opposite Constellation Software and Canagold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Software position performs unexpectedly, Canagold Resources 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 Canagold Resources will offset losses from the drop in Canagold Resources' long position.

The idea behind Constellation Software and Canagold Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.