Correlation Between Winpak and FirstService Corp

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

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

Diversification Opportunities for Winpak and FirstService Corp

-0.55

Correlation Coefficient

Winpak  FirstService Corp

Excellent diversification

The 3 months correlation between Winpak and FirstService is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Winpak and FirstService Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstService Corp and Winpak 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 Winpak 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 Winpak i.e., Winpak and FirstService Corp go up and down completely randomly.

Pair Corralation between Winpak and FirstService Corp

Assuming the 90 days trading horizon Winpak is expected to under-perform the FirstService Corp. But the stock apears to be less risky and, when comparing its historical volatility, Winpak is 1.19 times less risky than FirstService Corp. The stock trades about -0.05 of its potential returns per unit of risk. The FirstService Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  24,008  in FirstService Corp on May 3, 2025 and sell it today you would earn a total of  3,304  from holding FirstService Corp or generate 13.76% return on investment over 90 days.

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

Winpak  vs.  FirstService Corp

Winpak

Risk-Adjusted Performance

Very Weak

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

FirstService Corp

Risk-Adjusted Performance

OK

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 displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Winpak and FirstService Corp

The main advantage of trading using opposite Winpak and FirstService Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winpak 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 Winpak 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.