Correlation Between Jones Lang and FirstService Corp

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

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

Diversification Opportunities for Jones Lang and FirstService Corp

0.38

Correlation Coefficient

Jones Lang  FirstService Corp

Weak diversification

The 3 months correlation between Jones and FirstService is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Jones Lang LaSalle and FirstService Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstService Corp and Jones Lang 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 Jones Lang LaSalle 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 Jones Lang i.e., Jones Lang and FirstService Corp go up and down completely randomly.

Pair Corralation between Jones Lang and FirstService Corp

Considering the 90-day investment horizon Jones Lang LaSalle is expected to generate 1.66 times more return on investment than FirstService Corp. However, Jones Lang is 1.66 times more volatile than FirstService Corp. It trades about -0.01 of its potential returns per unit of risk. FirstService Corp is currently generating about -0.1 per unit of risk. If you would invest  25,218  in Jones Lang LaSalle on December 29, 2024 and sell it today you would lose (628.00) from holding Jones Lang LaSalle or give up 2.49% of portfolio value over 90 days.

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

Jones Lang LaSalle  vs.  FirstService Corp

Jones Lang LaSalle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jones Lang LaSalle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Jones Lang is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional 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 Jones Lang and FirstService Corp

The main advantage of trading using opposite Jones Lang and FirstService Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jones Lang 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 Jones Lang LaSalle 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.