Correlation Between Winpak and FirstService Corp
Can any of the company-specific risk be diversified away by investing in both Winpak 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 Winpak and FirstService Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Winpak and FirstService Corp, you can compare the effects of market volatilities on Winpak 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 Winpak with a short position of FirstService Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winpak and FirstService Corp.
Diversification Opportunities for Winpak and FirstService Corp
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Winpak and FirstService is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Winpak and FirstService Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstService Corp and Winpak 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 Winpak 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 Winpak i.e., Winpak and FirstService Corp go up and down completely randomly.
Pair Corralation between Winpak and FirstService Corp
Assuming the 90 days trading horizon Winpak is expected to generate 1.25 times more return on investment than FirstService Corp. However, Winpak is 1.25 times more volatile than FirstService Corp. It trades about 0.07 of its potential returns per unit of risk. FirstService Corp is currently generating about 0.09 per unit of risk. If you would invest 3,917 in Winpak on August 24, 2024 and sell it today you would earn a total of 1,002 from holding Winpak or generate 25.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Winpak vs. FirstService Corp
Performance |
| Timeline |
| Winpak |
| FirstService Corp |
Winpak and FirstService Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Winpak and FirstService Corp
The main advantage of trading using opposite Winpak and FirstService Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winpak 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.| Winpak vs. Dream Industrial Real | Winpak vs. First National Financial | Winpak vs. North American Financial | Winpak vs. CI Financial Corp |
| FirstService Corp vs. Berkshire Hathaway CDR | FirstService Corp vs. Microsoft Corp CDR | FirstService Corp vs. Apple Inc CDR | FirstService Corp vs. Alphabet Inc CDR |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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