Correlation Between FirstService Corp and Re Max

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

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

Diversification Opportunities for FirstService Corp and Re Max

0.09

Correlation Coefficient

FirstService Corp  Re Max

Significant diversification

The 3 months correlation between FirstService and RMAX is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding FirstService Corp and Re Max Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Re Max Holding 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 Re Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Re Max Holding has no effect on the direction of FirstService Corp i.e., FirstService Corp and Re Max go up and down completely randomly.

Pair Corralation between FirstService Corp and Re Max

Considering the 90-day investment horizon FirstService Corp is expected to generate 0.51 times more return on investment than Re Max. However, FirstService Corp is 1.95 times less risky than Re Max. It trades about 0.04 of its potential returns per unit of risk. Re Max Holding is currently generating about 0.01 per unit of risk. If you would invest  16,578  in FirstService Corp on March 28, 2025 and sell it today you would earn a total of  559.00  from holding FirstService Corp or generate 3.37% return on investment over 90 days.

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

FirstService Corp  vs.  Re Max Holding

FirstService Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FirstService Corp are ranked lower than 3 (%) 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.

Re Max Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Re Max Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Re Max is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FirstService Corp and Re Max

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

The idea behind FirstService Corp and Re Max Holding 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.