Correlation Between FirstService Corp and Mainstreet Equity
Can any of the company-specific risk be diversified away by investing in both FirstService Corp and Mainstreet Equity 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 FirstService Corp and Mainstreet Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstService Corp and Mainstreet Equity Corp, you can compare the effects of market volatilities on FirstService Corp and Mainstreet Equity 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 FirstService Corp with a short position of Mainstreet Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstService Corp and Mainstreet Equity.
Diversification Opportunities for FirstService Corp and Mainstreet Equity
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FirstService and Mainstreet is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding FirstService Corp and Mainstreet Equity Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstreet Equity Corp and FirstService Corp 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 FirstService Corp are associated (or correlated) with Mainstreet Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstreet Equity Corp has no effect on the direction of FirstService Corp i.e., FirstService Corp and Mainstreet Equity go up and down completely randomly.
Pair Corralation between FirstService Corp and Mainstreet Equity
Assuming the 90 days trading horizon FirstService Corp is expected to generate 0.77 times more return on investment than Mainstreet Equity. However, FirstService Corp is 1.3 times less risky than Mainstreet Equity. It trades about 0.21 of its potential returns per unit of risk. Mainstreet Equity Corp is currently generating about 0.01 per unit of risk. If you would invest 24,146 in FirstService Corp on August 31, 2024 and sell it today you would earn a total of 3,212 from holding FirstService Corp or generate 13.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FirstService Corp vs. Mainstreet Equity Corp
Performance |
| Timeline |
| FirstService Corp |
| Mainstreet Equity Corp |
FirstService Corp and Mainstreet Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FirstService Corp and Mainstreet Equity
The main advantage of trading using opposite FirstService Corp and Mainstreet Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstService Corp position performs unexpectedly, Mainstreet Equity 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 Mainstreet Equity will offset losses from the drop in Mainstreet Equity's long position.| FirstService Corp vs. Colliers International Group | FirstService Corp vs. Altus Group Limited | FirstService Corp vs. CCL Industries | FirstService Corp vs. Ritchie Bros Auctioneers |
| Mainstreet Equity vs. Morguard | Mainstreet Equity vs. Melcor Developments | Mainstreet Equity vs. Boardwalk Real Estate | Mainstreet Equity vs. Genesis Land Development |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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