Correlation Between Blue Line and Geo

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

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

Diversification Opportunities for Blue Line and Geo

-0.8

Correlation Coefficient

Blue Line  Geo

Pay attention - limited upside

The 3 months correlation between Blue and Geo is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Blue Line Protection and Geo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo Group and Blue Line 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 Blue Line Protection are associated (or correlated) with Geo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Group has no effect on the direction of Blue Line i.e., Blue Line and Geo go up and down completely randomly.

Pair Corralation between Blue Line and Geo

Given the investment horizon of 90 days Blue Line Protection is expected to generate 5.84 times more return on investment than Geo. However, Blue Line is 5.84 times more volatile than Geo Group. It trades about 0.08 of its potential returns per unit of risk. Geo Group is currently generating about 0.1 per unit of risk. If you would invest  4.00  in Blue Line Protection on September 24, 2024 and sell it today you would earn a total of  1.51  from holding Blue Line Protection or generate 37.75% return on investment over 90 days.

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

Blue Line Protection  vs.  Geo Group

Blue Line Protection

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Line Protection has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Geo Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Geo Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Geo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Line and Geo

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

The idea behind Blue Line Protection and Geo 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.