Correlation Between InterRent Real and FirstService Corp

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

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

Diversification Opportunities for InterRent Real and FirstService Corp

-0.34

Correlation Coefficient

InterRent Real  FirstService Corp

Very good diversification

The 3 months correlation between InterRent and FirstService is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding InterRent Real Estate and FirstService Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstService Corp and InterRent Real 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 InterRent Real Estate 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 InterRent Real i.e., InterRent Real and FirstService Corp go up and down completely randomly.

Pair Corralation between InterRent Real and FirstService Corp

Assuming the 90 days trading horizon InterRent Real Estate is expected to generate 0.92 times more return on investment than FirstService Corp. However, InterRent Real Estate is 1.08 times less risky than FirstService Corp. It trades about 0.16 of its potential returns per unit of risk. FirstService Corp is currently generating about -0.1 per unit of risk. If you would invest  1,003  in InterRent Real Estate on December 29, 2024 and sell it today you would earn a total of  127.00  from holding InterRent Real Estate or generate 12.66% return on investment over 90 days.

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

InterRent Real Estate  vs.  FirstService Corp

InterRent Real Estate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in InterRent Real Estate are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, InterRent Real may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 abnormal 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.

Pair Trading with InterRent Real and FirstService Corp

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

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.