Correlation Between FirstService Corp and Generationome Properties

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

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

Diversification Opportunities for FirstService Corp and Generationome Properties

-0.69

Correlation Coefficient

FirstService Corp  Generationome Properties

Excellent diversification

The 3 months correlation between FirstService and Generationome is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding FirstService Corp and Generationome Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generationome Properties 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 Generationome Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generationome Properties has no effect on the direction of FirstService Corp i.e., FirstService Corp and Generationome Properties go up and down completely randomly.

Pair Corralation between FirstService Corp and Generationome Properties

Considering the 90-day investment horizon FirstService Corp is expected to generate 0.4 times more return on investment than Generationome Properties. However, FirstService Corp is 2.47 times less risky than Generationome Properties. It trades about 0.14 of its potential returns per unit of risk. Generationome Properties is currently generating about -0.11 per unit of risk. If you would invest  17,822  in FirstService Corp on September 3, 2024 and sell it today you would earn a total of  1,597  from holding FirstService Corp or generate 8.96% return on investment over 90 days.

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

FirstService Corp  vs.  Generationome Properties

FirstService Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FirstService Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, FirstService Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Generationome Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generationome Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with FirstService Corp and Generationome Properties

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

The idea behind FirstService Corp and Generationome Properties 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.