Correlation Between Garofalo Health and Constellation Software

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

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

Diversification Opportunities for Garofalo Health and Constellation Software

0.24

Correlation Coefficient

Garofalo Health  Constellation Software

Modest diversification

The 3 months correlation between Garofalo and Constellation is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Garofalo Health Care and Constellation Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Software and Garofalo Health 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 Garofalo Health Care are associated (or correlated) with Constellation Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Software has no effect on the direction of Garofalo Health i.e., Garofalo Health and Constellation Software go up and down completely randomly.

Pair Corralation between Garofalo Health and Constellation Software

Assuming the 90 days horizon Garofalo Health Care is expected to under-perform the Constellation Software. In addition to that, Garofalo Health is 1.02 times more volatile than Constellation Software. It trades about -0.01 of its total potential returns per unit of risk. Constellation Software is currently generating about 0.09 per unit of volatility. If you would invest  295,918  in Constellation Software on April 20, 2025 and sell it today you would earn a total of  19,082  from holding Constellation Software or generate 6.45% return on investment over 90 days.

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

Garofalo Health Care  vs.  Constellation Software

Garofalo Health Care

Risk-Adjusted Performance

Very Weak

Over the last 90 days Garofalo Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Garofalo Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Constellation Software

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Constellation Software are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Constellation Software may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Garofalo Health and Constellation Software

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

The idea behind Garofalo Health Care and Constellation Software 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.