Correlation Between FirstService Corp and Canadian Pacific

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

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

Diversification Opportunities for FirstService Corp and Canadian Pacific

-0.81

Correlation Coefficient

FirstService Corp  Canadian Pacific

Pay attention - limited upside

The 3 months correlation between FirstService and Canadian is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding FirstService Corp and Canadian Pacific Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Pacific Railway 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 Canadian Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Pacific Railway has no effect on the direction of FirstService Corp i.e., FirstService Corp and Canadian Pacific go up and down completely randomly.

Pair Corralation between FirstService Corp and Canadian Pacific

Assuming the 90 days trading horizon FirstService Corp is expected to generate 1.32 times more return on investment than Canadian Pacific. However, FirstService Corp is 1.32 times more volatile than Canadian Pacific Railway. It trades about 0.12 of its potential returns per unit of risk. Canadian Pacific Railway is currently generating about -0.14 per unit of risk. If you would invest  24,483  in FirstService Corp on May 19, 2025 and sell it today you would earn a total of  2,917  from holding FirstService Corp or generate 11.91% return on investment over 90 days.

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

FirstService Corp  vs.  Canadian Pacific Railway

FirstService Corp

Risk-Adjusted Performance

Fair

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 September 2025.

Canadian Pacific Railway

Risk-Adjusted Performance

Weakest

Over the last 90 days Canadian Pacific Railway has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with FirstService Corp and Canadian Pacific

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

The idea behind FirstService Corp and Canadian Pacific Railway 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.