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

0.42

Correlation Coefficient

Winpak  FirstService Corp

Very weak diversification

The 3 months correlation between Winpak and FirstService is 0.42. 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 generate 0.89 times more return on investment than FirstService Corp. However, Winpak is 1.12 times less risky than FirstService Corp. It trades about 0.12 of its potential returns per unit of risk. FirstService Corp is currently generating about 0.06 per unit of risk. If you would invest  4,199  in Winpak on April 22, 2025 and sell it today you would earn a total of  282.00  from holding Winpak or generate 6.72% return on investment over 90 days.

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

Winpak  vs.  FirstService Corp

Winpak

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Winpak are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, Winpak may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.