Correlation Between FirstService Corp and GoldMining

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

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

Diversification Opportunities for FirstService Corp and GoldMining

-0.33

Correlation Coefficient

FirstService Corp  GoldMining

Very good diversification

The 3 months correlation between FirstService and GoldMining is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding FirstService Corp and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of FirstService Corp i.e., FirstService Corp and GoldMining go up and down completely randomly.

Pair Corralation between FirstService Corp and GoldMining

Assuming the 90 days trading horizon FirstService Corp is expected to generate 0.37 times more return on investment than GoldMining. However, FirstService Corp is 2.69 times less risky than GoldMining. It trades about 0.16 of its potential returns per unit of risk. GoldMining is currently generating about 0.02 per unit of risk. If you would invest  24,489  in FirstService Corp on September 12, 2024 and sell it today you would earn a total of  2,511  from holding FirstService Corp or generate 10.25% return on investment over 90 days.

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

FirstService Corp  vs.  GoldMining

FirstService Corp

Risk-Adjusted Performance

12 of 100

Good

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

GoldMining

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GoldMining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, GoldMining is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FirstService Corp and GoldMining

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

The idea behind FirstService Corp and GoldMining 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.