Correlation Between Constellation Software and Q2 Metals

Can any of the company-specific risk be diversified away by investing in both Constellation Software and Q2 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 Q2 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 Q2 Metals Corp, you can compare the effects of market volatilities on Constellation Software and Q2 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 Q2 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Software and Q2 Metals.

Diversification Opportunities for Constellation Software and Q2 Metals

-0.49

Correlation Coefficient

Constellation Software  Q2 Metals

Very good diversification

The 3 months correlation between Constellation and QTWO is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and Q2 Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Q2 Metals 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 Q2 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Q2 Metals Corp has no effect on the direction of Constellation Software i.e., Constellation Software and Q2 Metals go up and down completely randomly.

Pair Corralation between Constellation Software and Q2 Metals

Assuming the 90 days trading horizon Constellation Software is expected to under-perform the Q2 Metals. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Software is 3.72 times less risky than Q2 Metals. The stock trades about -0.4 of its potential returns per unit of risk. The Q2 Metals Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  96.00  in Q2 Metals Corp on October 10, 2024 and sell it today you would lose (3.00) from holding Q2 Metals Corp or give up 3.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Constellation Software  vs.  Q2 Metals Corp

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.

Q2 Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Q2 Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Constellation Software and Q2 Metals

The main advantage of trading using opposite Constellation Software and Q2 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Software position performs unexpectedly, Q2 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 Q2 Metals will offset losses from the drop in Q2 Metals' long position.

The idea behind Constellation Software and Q2 Metals 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.