Correlation Between FirstService Corp and Canagold Resources

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

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

Diversification Opportunities for FirstService Corp and Canagold Resources

-0.65

Correlation Coefficient

FirstService Corp  Canagold Resources

Excellent diversification

The 3 months correlation between FirstService and Canagold is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding FirstService Corp and Canagold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canagold Resources 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 Canagold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canagold Resources has no effect on the direction of FirstService Corp i.e., FirstService Corp and Canagold Resources go up and down completely randomly.

Pair Corralation between FirstService Corp and Canagold Resources

Assuming the 90 days trading horizon FirstService Corp is expected to generate 0.23 times more return on investment than Canagold Resources. However, FirstService Corp is 4.35 times less risky than Canagold Resources. It trades about -0.3 of its potential returns per unit of risk. Canagold Resources is currently generating about -0.1 per unit of risk. If you would invest  27,524  in FirstService Corp on September 25, 2024 and sell it today you would lose (1,125) from holding FirstService Corp or give up 4.09% of portfolio value over 90 days.

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

FirstService Corp  vs.  Canagold Resources

FirstService Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FirstService Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FirstService Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Canagold Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with FirstService Corp and Canagold Resources

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

The idea behind FirstService Corp and Canagold Resources 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.