Correlation Between Constellation Software and Apple CDR

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

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

Diversification Opportunities for Constellation Software and Apple CDR

0.61

Correlation Coefficient

Constellation Software  Apple CDR

Poor diversification

The 3 months correlation between Constellation and Apple is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and Apple CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple CDR 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 Apple CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple CDR has no effect on the direction of Constellation Software i.e., Constellation Software and Apple CDR go up and down completely randomly.

Pair Corralation between Constellation Software and Apple CDR

Assuming the 90 days trading horizon Constellation Software is expected to generate 0.73 times more return on investment than Apple CDR. However, Constellation Software is 1.38 times less risky than Apple CDR. It trades about 0.09 of its potential returns per unit of risk. Apple CDR is currently generating about 0.03 per unit of risk. If you would invest  466,294  in Constellation Software on April 15, 2025 and sell it today you would earn a total of  29,643  from holding Constellation Software or generate 6.36% return on investment over 90 days.

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

Constellation Software  vs.  Apple CDR

Constellation Software

Risk-Adjusted Performance

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 very unfluctuating basic indicators, Constellation Software may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Apple CDR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apple CDR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Apple CDR 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 Apple CDR

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

The idea behind Constellation Software and Apple CDR 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.