Correlation Between Constellation Software and Calibre Mining

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

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

Diversification Opportunities for Constellation Software and Calibre Mining

0.01

Correlation Coefficient

Constellation Software  Calibre Mining

Significant diversification

The 3 months correlation between Constellation and Calibre is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and Calibre Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calibre Mining 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 Calibre Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calibre Mining Corp has no effect on the direction of Constellation Software i.e., Constellation Software and Calibre Mining go up and down completely randomly.

Pair Corralation between Constellation Software and Calibre Mining

Assuming the 90 days trading horizon Constellation Software is expected to under-perform the Calibre Mining. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Software is 1.87 times less risky than Calibre Mining. The stock trades about -0.02 of its potential returns per unit of risk. The Calibre Mining Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  213.00  in Calibre Mining Corp on October 25, 2024 and sell it today you would earn a total of  31.00  from holding Calibre Mining Corp or generate 14.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Constellation Software  vs.  Calibre Mining Corp

Constellation Software

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Constellation Software are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Calibre Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Constellation Software and Calibre Mining

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

The idea behind Constellation Software and Calibre Mining Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.