Correlation Between FirstService Corp and CoStar

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

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

Diversification Opportunities for FirstService Corp and CoStar

0.46

Correlation Coefficient

FirstService Corp  CoStar

Very weak diversification

The 3 months correlation between FirstService and CoStar is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding FirstService Corp and CoStar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoStar Group 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 CoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoStar Group has no effect on the direction of FirstService Corp i.e., FirstService Corp and CoStar go up and down completely randomly.

Pair Corralation between FirstService Corp and CoStar

Considering the 90-day investment horizon FirstService Corp is expected to generate 0.74 times more return on investment than CoStar. However, FirstService Corp is 1.35 times less risky than CoStar. It trades about 0.17 of its potential returns per unit of risk. CoStar Group is currently generating about 0.11 per unit of risk. If you would invest  17,172  in FirstService Corp on April 28, 2025 and sell it today you would earn a total of  2,836  from holding FirstService Corp or generate 16.52% return on investment over 90 days.

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

FirstService Corp  vs.  CoStar Group

FirstService Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FirstService Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, FirstService Corp showed solid returns over the last few months and may actually be approaching a breakup point.

CoStar Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CoStar Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, CoStar reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FirstService Corp and CoStar

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

The idea behind FirstService Corp and CoStar Group 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.