Correlation Between FirstService Corp and Nexus Real

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

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

Diversification Opportunities for FirstService Corp and Nexus Real

0.43

Correlation Coefficient

FirstService Corp  Nexus Real

Very weak diversification

The 3 months correlation between FirstService and Nexus is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding FirstService Corp and Nexus Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexus Real Estate 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 Nexus Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexus Real Estate has no effect on the direction of FirstService Corp i.e., FirstService Corp and Nexus Real go up and down completely randomly.

Pair Corralation between FirstService Corp and Nexus Real

Assuming the 90 days trading horizon FirstService Corp is expected to generate 4.84 times less return on investment than Nexus Real. But when comparing it to its historical volatility, FirstService Corp is 1.15 times less risky than Nexus Real. It trades about 0.06 of its potential returns per unit of risk. Nexus Real Estate is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  640.00  in Nexus Real Estate on April 20, 2025 and sell it today you would earn a total of  121.00  from holding Nexus Real Estate or generate 18.91% 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.  Nexus Real Estate

FirstService Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FirstService Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, FirstService Corp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Nexus Real Estate

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nexus Real Estate are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nexus Real sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FirstService Corp and Nexus Real

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

The idea behind FirstService Corp and Nexus Real Estate 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.