Correlation Between Geo and International Consolidated

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

By analyzing existing cross correlation between Geo Group and International Consolidated Companies, you can compare the effects of market volatilities on Geo and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geo and International Consolidated.

Diversification Opportunities for Geo and International Consolidated

-0.61

Correlation Coefficient

Geo  International Consolidated

Excellent diversification

The 3 months correlation between Geo and International is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Geo Group and International Consolidated Com in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 Geo Group are associated (or correlated) with International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Geo i.e., Geo and International Consolidated go up and down completely randomly.

Pair Corralation between Geo and International Consolidated

Considering the 90-day investment horizon Geo Group is expected to under-perform the International Consolidated. But the stock apears to be less risky and, when comparing its historical volatility, Geo Group is 32.77 times less risky than International Consolidated. The stock trades about -0.04 of its potential returns per unit of risk. The International Consolidated Companies is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1.01  in International Consolidated Companies on September 29, 2024 and sell it today you would earn a total of  1.49  from holding International Consolidated Companies or generate 147.52% return on investment over 90 days.

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

Geo Group  vs.  International Consolidated Com

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.

International Consolidated

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Companies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Geo and International Consolidated

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

The idea behind Geo Group and International Consolidated Companies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.