Correlation Between ECN Capital and FirstService Corp
Can any of the company-specific risk be diversified away by investing in both ECN Capital and FirstService Corp 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 ECN Capital and FirstService Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECN Capital Corp and FirstService Corp, you can compare the effects of market volatilities on ECN Capital and FirstService Corp 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 ECN Capital with a short position of FirstService Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECN Capital and FirstService Corp.
Diversification Opportunities for ECN Capital and FirstService Corp
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ECN and FirstService is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ECN Capital Corp and FirstService Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstService Corp and ECN Capital 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 ECN Capital Corp are associated (or correlated) with FirstService Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstService Corp has no effect on the direction of ECN Capital i.e., ECN Capital and FirstService Corp go up and down completely randomly.
Pair Corralation between ECN Capital and FirstService Corp
Assuming the 90 days trading horizon ECN Capital Corp is expected to generate 5.18 times more return on investment than FirstService Corp. However, ECN Capital is 5.18 times more volatile than FirstService Corp. It trades about 0.27 of its potential returns per unit of risk. FirstService Corp is currently generating about 0.23 per unit of risk. If you would invest 220.00 in ECN Capital Corp on August 28, 2024 and sell it today you would earn a total of 71.00 from holding ECN Capital Corp or generate 32.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
ECN Capital Corp vs. FirstService Corp
Performance |
| Timeline |
| ECN Capital Corp |
| FirstService Corp |
ECN Capital and FirstService Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECN Capital and FirstService Corp
The main advantage of trading using opposite ECN Capital and FirstService Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECN Capital position performs unexpectedly, FirstService Corp 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 FirstService Corp will offset losses from the drop in FirstService Corp's long position.| ECN Capital vs. Element Fleet Management | ECN Capital vs. Colliers International Group | ECN Capital vs. Altus Group Limited | ECN Capital vs. FirstService Corp |
| FirstService Corp vs. Colliers International Group | FirstService Corp vs. Altus Group Limited | FirstService Corp vs. CCL Industries | FirstService Corp vs. Ritchie Bros Auctioneers |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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