Correlation Between FirstService Corp and Stantec
Can any of the company-specific risk be diversified away by investing in both FirstService Corp and Stantec 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 Stantec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstService Corp and Stantec, you can compare the effects of market volatilities on FirstService Corp and Stantec 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 Stantec. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstService Corp and Stantec.
Diversification Opportunities for FirstService Corp and Stantec
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FirstService and Stantec is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding FirstService Corp and Stantec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stantec 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 Stantec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stantec has no effect on the direction of FirstService Corp i.e., FirstService Corp and Stantec go up and down completely randomly.
Pair Corralation between FirstService Corp and Stantec
Assuming the 90 days trading horizon FirstService Corp is expected to generate 1.35 times less return on investment than Stantec. But when comparing it to its historical volatility, FirstService Corp is 1.11 times less risky than Stantec. It trades about 0.09 of its potential returns per unit of risk. Stantec is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,518 in Stantec on August 31, 2024 and sell it today you would earn a total of 5,588 from holding Stantec or generate 85.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FirstService Corp vs. Stantec
Performance |
| Timeline |
| FirstService Corp |
| Stantec |
FirstService Corp and Stantec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FirstService Corp and Stantec
The main advantage of trading using opposite FirstService Corp and Stantec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstService Corp position performs unexpectedly, Stantec 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 Stantec will offset losses from the drop in Stantec'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 |
| Stantec vs. Toromont Industries | Stantec vs. WSP Global | Stantec vs. Ritchie Bros Auctioneers | Stantec vs. Stella Jones |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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