Correlation Between GEO and HYATT HOTELS-A

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

By analyzing existing cross correlation between The GEO Group and HYATT HOTELS A, you can compare the effects of market volatilities on GEO and HYATT HOTELS-A 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 GEO with a short position of HYATT HOTELS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEO and HYATT HOTELS-A.

Diversification Opportunities for GEO and HYATT HOTELS-A

0.57

Correlation Coefficient

GEO  HYATT HOTELS-A

Very weak diversification

The 3 months correlation between GEO and HYATT is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding The GEO Group and HYATT HOTELS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYATT HOTELS A and GEO 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 The GEO Group are associated (or correlated) with HYATT HOTELS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYATT HOTELS A has no effect on the direction of GEO i.e., GEO and HYATT HOTELS-A go up and down completely randomly.

Pair Corralation between GEO and HYATT HOTELS-A

Assuming the 90 days horizon The GEO Group is expected to generate 1.76 times more return on investment than HYATT HOTELS-A. However, GEO is 1.76 times more volatile than HYATT HOTELS A. It trades about 0.01 of its potential returns per unit of risk. HYATT HOTELS A is currently generating about -0.18 per unit of risk. If you would invest  2,685  in The GEO Group on December 22, 2024 and sell it today you would lose (80.00) from holding The GEO Group or give up 2.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

The GEO Group  vs.  HYATT HOTELS A

GEO Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days The GEO Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GEO is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

HYATT HOTELS A

Risk-Adjusted Performance

Very Weak

Over the last 90 days HYATT HOTELS A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GEO and HYATT HOTELS-A

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

The idea behind The GEO Group and HYATT HOTELS A 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.