Correlation Between Constellation Software and UniCredit SpA

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

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

Diversification Opportunities for Constellation Software and UniCredit SpA

0.05

Correlation Coefficient

Constellation Software  UniCredit SpA

Significant diversification

The 3 months correlation between Constellation and UniCredit is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA 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 UniCredit SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UniCredit SpA has no effect on the direction of Constellation Software i.e., Constellation Software and UniCredit SpA go up and down completely randomly.

Pair Corralation between Constellation Software and UniCredit SpA

Assuming the 90 days trading horizon Constellation Software is expected to under-perform the UniCredit SpA. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Software is 1.58 times less risky than UniCredit SpA. The stock trades about -0.01 of its potential returns per unit of risk. The UniCredit SpA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  5,100  in UniCredit SpA on April 25, 2025 and sell it today you would earn a total of  726.00  from holding UniCredit SpA or generate 14.24% 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.  UniCredit SpA

Constellation Software

Risk-Adjusted Performance

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 comparatively stable fundamental indicators, Constellation Software is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

UniCredit SpA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UniCredit SpA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, UniCredit SpA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Constellation Software and UniCredit SpA

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

The idea behind Constellation Software and UniCredit SpA 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.