Correlation Between FirstService Corp and Capstone Mining
Can any of the company-specific risk be diversified away by investing in both FirstService Corp and Capstone Mining 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 Capstone Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstService Corp and Capstone Mining Corp, you can compare the effects of market volatilities on FirstService Corp and Capstone Mining 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 Capstone Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstService Corp and Capstone Mining.
Diversification Opportunities for FirstService Corp and Capstone Mining
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FirstService and Capstone is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding FirstService Corp and Capstone Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Mining 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 Capstone Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Mining Corp has no effect on the direction of FirstService Corp i.e., FirstService Corp and Capstone Mining go up and down completely randomly.
Pair Corralation between FirstService Corp and Capstone Mining
Assuming the 90 days trading horizon FirstService Corp is expected to generate 0.37 times more return on investment than Capstone Mining. However, FirstService Corp is 2.7 times less risky than Capstone Mining. It trades about 0.16 of its potential returns per unit of risk. Capstone Mining Corp is currently generating about 0.01 per unit of risk. If you would invest 24,558 in FirstService Corp on September 14, 2024 and sell it today you would earn a total of 2,558 from holding FirstService Corp or generate 10.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
FirstService Corp vs. Capstone Mining Corp
Performance |
Timeline |
FirstService Corp |
Capstone Mining Corp |
FirstService Corp and Capstone Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FirstService Corp and Capstone Mining
The main advantage of trading using opposite FirstService Corp and Capstone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstService Corp position performs unexpectedly, Capstone Mining 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 Capstone Mining will offset losses from the drop in Capstone Mining's long position.FirstService Corp vs. BSR Real Estate | FirstService Corp vs. European Residential Real | FirstService Corp vs. Minto Apartment Real | FirstService Corp vs. iShares Canadian HYBrid |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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