Correlation Between CBL Associates and FirstService Corp

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

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

Diversification Opportunities for CBL Associates and FirstService Corp

0.71

Correlation Coefficient

CBL Associates  FirstService Corp

Poor diversification

The 3 months correlation between CBL and FirstService is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CBL Associates Properties and FirstService Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstService Corp and CBL Associates 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 CBL Associates Properties 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 CBL Associates i.e., CBL Associates and FirstService Corp go up and down completely randomly.

Pair Corralation between CBL Associates and FirstService Corp

Considering the 90-day investment horizon CBL Associates Properties is expected to generate 1.5 times more return on investment than FirstService Corp. However, CBL Associates is 1.5 times more volatile than FirstService Corp. It trades about 0.17 of its potential returns per unit of risk. FirstService Corp is currently generating about 0.07 per unit of risk. If you would invest  2,253  in CBL Associates Properties on April 20, 2025 and sell it today you would earn a total of  392.00  from holding CBL Associates Properties or generate 17.4% return on investment over 90 days.

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

CBL Associates Properties  vs.  FirstService Corp

CBL Associates Properties

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CBL Associates Properties are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, CBL Associates disclosed solid returns over the last few months and may actually be approaching a breakup point.

FirstService Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FirstService Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, FirstService Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with CBL Associates and FirstService Corp

The main advantage of trading using opposite CBL Associates and FirstService Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBL Associates 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 CBL Associates Properties 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.