Correlation Between Constellation Software and Snowflake

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

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

Diversification Opportunities for Constellation Software and Snowflake

-0.59

Correlation Coefficient

Constellation Software  Snowflake

Excellent diversification

The 3 months correlation between Constellation and Snowflake is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Software and Snowflake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snowflake 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 Snowflake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snowflake has no effect on the direction of Constellation Software i.e., Constellation Software and Snowflake go up and down completely randomly.

Pair Corralation between Constellation Software and Snowflake

Assuming the 90 days trading horizon Constellation Software is expected to under-perform the Snowflake. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Software is 1.51 times less risky than Snowflake. The stock trades about -0.18 of its potential returns per unit of risk. The Snowflake is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  21,502  in Snowflake on July 24, 2025 and sell it today you would earn a total of  3,250  from holding Snowflake or generate 15.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Constellation Software  vs.  Snowflake

Constellation Software

Risk-Adjusted Performance

Weakest

Over the last 90 days Constellation Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in November 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Snowflake

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Snowflake are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Snowflake showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Constellation Software and Snowflake

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

The idea behind Constellation Software and Snowflake 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.