Correlation Between FirstService Corp and Dundee Precious

Can any of the company-specific risk be diversified away by investing in both FirstService Corp and Dundee Precious 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 Dundee Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FirstService Corp and Dundee Precious Metals, you can compare the effects of market volatilities on FirstService Corp and Dundee Precious 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 Dundee Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstService Corp and Dundee Precious.

Diversification Opportunities for FirstService Corp and Dundee Precious

-0.79

Correlation Coefficient

FirstService Corp  Dundee Precious

Pay attention - limited upside

The 3 months correlation between FirstService and Dundee is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding FirstService Corp and Dundee Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dundee Precious Metals 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 Dundee Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dundee Precious Metals has no effect on the direction of FirstService Corp i.e., FirstService Corp and Dundee Precious go up and down completely randomly.

Pair Corralation between FirstService Corp and Dundee Precious

Assuming the 90 days trading horizon FirstService Corp is expected to under-perform the Dundee Precious. But the stock apears to be less risky and, when comparing its historical volatility, FirstService Corp is 1.21 times less risky than Dundee Precious. The stock trades about -0.09 of its potential returns per unit of risk. The Dundee Precious Metals is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  1,314  in Dundee Precious Metals on December 25, 2024 and sell it today you would earn a total of  565.00  from holding Dundee Precious Metals or generate 43.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

FirstService Corp  vs.  Dundee Precious Metals

FirstService Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days FirstService Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Dundee Precious Metals

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dundee Precious Metals are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Dundee Precious displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FirstService Corp and Dundee Precious

The main advantage of trading using opposite FirstService Corp and Dundee Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstService Corp position performs unexpectedly, Dundee Precious 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 Dundee Precious will offset losses from the drop in Dundee Precious' long position.

The idea behind FirstService Corp and Dundee Precious Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.