Correlation Between CoreCivic and Civeo Corp

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

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

Diversification Opportunities for CoreCivic and Civeo Corp

-0.19

Correlation Coefficient

CoreCivic  Civeo Corp

Good diversification

The 3 months correlation between CoreCivic and Civeo is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding CoreCivic and Civeo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civeo Corp and CoreCivic 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 CoreCivic are associated (or correlated) with Civeo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civeo Corp has no effect on the direction of CoreCivic i.e., CoreCivic and Civeo Corp go up and down completely randomly.

Pair Corralation between CoreCivic and Civeo Corp

Considering the 90-day investment horizon CoreCivic is expected to under-perform the Civeo Corp. But the stock apears to be less risky and, when comparing its historical volatility, CoreCivic is 1.3 times less risky than Civeo Corp. The stock trades about -0.03 of its potential returns per unit of risk. The Civeo Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,231  in Civeo Corp on December 29, 2024 and sell it today you would earn a total of  54.00  from holding Civeo Corp or generate 2.42% return on investment over 90 days.

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

CoreCivic  vs.  Civeo Corp

CoreCivic

Risk-Adjusted Performance

Very Weak

Over the last 90 days CoreCivic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CoreCivic is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Civeo Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Civeo Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Civeo Corp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CoreCivic and Civeo Corp

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

The idea behind CoreCivic and Civeo 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.