Correlation Between Constellation Software and AXWAY SOFTWARE

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

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

Diversification Opportunities for Constellation Software and AXWAY SOFTWARE

0.14

Correlation Coefficient

Constellation Software  AXWAY SOFTWARE

Average diversification

The 3 months correlation between Constellation and AXWAY is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and AXWAY SOFTWARE EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXWAY SOFTWARE EO 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 AXWAY SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXWAY SOFTWARE EO has no effect on the direction of Constellation Software i.e., Constellation Software and AXWAY SOFTWARE go up and down completely randomly.

Pair Corralation between Constellation Software and AXWAY SOFTWARE

Assuming the 90 days trading horizon Constellation Software is expected to generate 5.12 times less return on investment than AXWAY SOFTWARE. But when comparing it to its historical volatility, Constellation Software is 2.39 times less risky than AXWAY SOFTWARE. It trades about 0.09 of its potential returns per unit of risk. AXWAY SOFTWARE EO is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,000  in AXWAY SOFTWARE EO on April 20, 2025 and sell it today you would earn a total of  1,120  from holding AXWAY SOFTWARE EO or generate 37.33% return on investment over 90 days.

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

Constellation Software  vs.  AXWAY SOFTWARE EO

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.

AXWAY SOFTWARE EO

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AXWAY SOFTWARE EO are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AXWAY SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Constellation Software and AXWAY SOFTWARE

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

The idea behind Constellation Software and AXWAY SOFTWARE EO 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.