Correlation Between FirstService Corp and Canfor

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

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

Diversification Opportunities for FirstService Corp and Canfor

-0.31

Correlation Coefficient

FirstService Corp  Canfor

Very good diversification

The 3 months correlation between FirstService and Canfor is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding FirstService Corp and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor 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 Canfor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor has no effect on the direction of FirstService Corp i.e., FirstService Corp and Canfor go up and down completely randomly.

Pair Corralation between FirstService Corp and Canfor

Assuming the 90 days trading horizon FirstService Corp is expected to generate 0.79 times more return on investment than Canfor. However, FirstService Corp is 1.27 times less risky than Canfor. It trades about 0.13 of its potential returns per unit of risk. Canfor is currently generating about -0.02 per unit of risk. If you would invest  24,491  in FirstService Corp on May 16, 2025 and sell it today you would earn a total of  2,983  from holding FirstService Corp or generate 12.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

FirstService Corp  vs.  Canfor

FirstService Corp

Risk-Adjusted Performance

Fair

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 very unfluctuating basic indicators, FirstService Corp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Canfor

Risk-Adjusted Performance

Weak

Over the last 90 days Canfor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Canfor is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FirstService Corp and Canfor

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

The idea behind FirstService Corp and Canfor 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.