Correlation Between Granite Real and FirstService Corp
Can any of the company-specific risk be diversified away by investing in both Granite Real 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 Granite Real and FirstService Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Real Estate and FirstService Corp, you can compare the effects of market volatilities on Granite Real 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 Granite Real with a short position of FirstService Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Real and FirstService Corp.
Diversification Opportunities for Granite Real and FirstService Corp
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Granite and FirstService is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Granite Real Estate and FirstService Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstService Corp and Granite Real 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 Granite Real Estate 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 Granite Real i.e., Granite Real and FirstService Corp go up and down completely randomly.
Pair Corralation between Granite Real and FirstService Corp
Assuming the 90 days trading horizon Granite Real Estate is expected to under-perform the FirstService Corp. In addition to that, Granite Real is 1.0 times more volatile than FirstService Corp. It trades about -0.2 of its total potential returns per unit of risk. FirstService Corp is currently generating about 0.19 per unit of volatility. If you would invest 26,094 in FirstService Corp on September 13, 2024 and sell it today you would earn a total of 1,019 from holding FirstService Corp or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Real Estate vs. FirstService Corp
Performance |
| Timeline |
| Granite Real Estate |
| FirstService Corp |
Granite Real and FirstService Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Real and FirstService Corp
The main advantage of trading using opposite Granite Real and FirstService Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Real 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.| Granite Real vs. Canadian Apartment Properties | Granite Real vs. Choice Properties Real | Granite Real vs. HR Real Estate | Granite Real vs. Boardwalk Real Estate |
| FirstService Corp vs. BSR Real Estate | FirstService Corp vs. European Residential Real | FirstService Corp vs. Minto Apartment Real | FirstService Corp vs. iShares Canadian HYBrid |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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