Correlation Between Constellation Software and PREMIER FOODS

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Can any of the company-specific risk be diversified away by investing in both Constellation Software and PREMIER FOODS 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 PREMIER FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellation Software and PREMIER FOODS, you can compare the effects of market volatilities on Constellation Software and PREMIER FOODS 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 PREMIER FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Software and PREMIER FOODS.

Diversification Opportunities for Constellation Software and PREMIER FOODS

ConstellationPREMIERDiversified AwayConstellationPREMIERDiversified Away100%
0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Constellation and PREMIER is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS 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 PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of Constellation Software i.e., Constellation Software and PREMIER FOODS go up and down completely randomly.

Pair Corralation between Constellation Software and PREMIER FOODS

Assuming the 90 days trading horizon Constellation Software is expected to under-perform the PREMIER FOODS. In addition to that, Constellation Software is 1.07 times more volatile than PREMIER FOODS. It trades about -0.07 of its total potential returns per unit of risk. PREMIER FOODS is currently generating about -0.05 per unit of volatility. If you would invest  234.00  in PREMIER FOODS on October 31, 2024 and sell it today you would lose (8.00) from holding PREMIER FOODS or give up 3.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Constellation Software  vs.  PREMIER FOODS

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -10-50510
JavaScript chart by amCharts 3.21.15W9C FOJ1
       Timeline  
Constellation Software 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Constellation Software are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Constellation Software may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2,8002,9003,0003,1003,200
PREMIER FOODS 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in PREMIER FOODS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, PREMIER FOODS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2.12.152.22.252.32.35

Constellation Software and PREMIER FOODS Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.81-3.6-2.39-1.19-0.02011.182.413.654.896.13 0.050.100.15
JavaScript chart by amCharts 3.21.15W9C FOJ1
       Returns  

Pair Trading with Constellation Software and PREMIER FOODS

The main advantage of trading using opposite Constellation Software and PREMIER FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Software position performs unexpectedly, PREMIER FOODS 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 PREMIER FOODS will offset losses from the drop in PREMIER FOODS's long position.
The idea behind Constellation Software and PREMIER FOODS 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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