Correlation Between FirstService Corp and New York

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

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

Diversification Opportunities for FirstService Corp and New York

-0.49

Correlation Coefficient

FirstService Corp  New York

Very good diversification

The 3 months correlation between FirstService and New is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding FirstService Corp and New York City in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York City 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 New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York City has no effect on the direction of FirstService Corp i.e., FirstService Corp and New York go up and down completely randomly.

Pair Corralation between FirstService Corp and New York

Considering the 90-day investment horizon FirstService Corp is expected to under-perform the New York. But the stock apears to be less risky and, when comparing its historical volatility, FirstService Corp is 2.51 times less risky than New York. The stock trades about -0.08 of its potential returns per unit of risk. The New York City is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  900.00  in New York City on December 29, 2024 and sell it today you would earn a total of  154.00  from holding New York City or generate 17.11% 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.  New York City

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 conflicting performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

New York City

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New York City are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, New York exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FirstService Corp and New York

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

The idea behind FirstService Corp and New York City 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.