Correlation Between Fathom Holdings and FirstService Corp

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

By analyzing existing cross correlation between Fathom Holdings and FirstService Corp, you can compare the effects of market volatilities on Fathom Holdings 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 Fathom Holdings with a short position of FirstService Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fathom Holdings and FirstService Corp.

Diversification Opportunities for Fathom Holdings and FirstService Corp

0.79

Correlation Coefficient

Fathom Holdings  FirstService Corp

Poor diversification

The 3 months correlation between Fathom and FirstService is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fathom Holdings and FirstService Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstService Corp and Fathom Holdings 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 Fathom Holdings 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 Fathom Holdings i.e., Fathom Holdings and FirstService Corp go up and down completely randomly.

Pair Corralation between Fathom Holdings and FirstService Corp

Given the investment horizon of 90 days Fathom Holdings is expected to under-perform the FirstService Corp. In addition to that, Fathom Holdings is 3.52 times more volatile than FirstService Corp. It trades about -0.16 of its total potential returns per unit of risk. FirstService Corp is currently generating about -0.1 per unit of volatility. If you would invest  18,124  in FirstService Corp on December 30, 2024 and sell it today you would lose (1,519) from holding FirstService Corp or give up 8.38% of portfolio value over 90 days.

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

Fathom Holdings  vs.  FirstService Corp

Fathom Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fathom Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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.

Pair Trading with Fathom Holdings and FirstService Corp

The main advantage of trading using opposite Fathom Holdings and FirstService Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fathom Holdings 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.

The idea behind Fathom Holdings and FirstService Corp 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.