Correlation Between Constellation Software and Winpak

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

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

Diversification Opportunities for Constellation Software and Winpak

-0.21

Correlation Coefficient

Constellation Software  Winpak

Very good diversification

The 3 months correlation between Constellation and Winpak is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak 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 Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of Constellation Software i.e., Constellation Software and Winpak go up and down completely randomly.

Pair Corralation between Constellation Software and Winpak

Assuming the 90 days trading horizon Constellation Software is expected to under-perform the Winpak. In addition to that, Constellation Software is 1.32 times more volatile than Winpak. It trades about -0.01 of its total potential returns per unit of risk. Winpak is currently generating about 0.09 per unit of volatility. If you would invest  4,257  in Winpak on April 24, 2025 and sell it today you would earn a total of  218.00  from holding Winpak or generate 5.12% return on investment over 90 days.

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

Constellation Software  vs.  Winpak

Constellation Software

Risk-Adjusted Performance

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.

Winpak

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Winpak are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Winpak 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 Winpak

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

The idea behind Constellation Software and Winpak 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.