Correlation Between Geo and Mistras

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

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

Diversification Opportunities for Geo and Mistras

-0.64

Correlation Coefficient

Geo  Mistras

Excellent diversification

The 3 months correlation between Geo and Mistras is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Geo Group and Mistras Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mistras Group 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 Mistras. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mistras Group has no effect on the direction of Geo i.e., Geo and Mistras go up and down completely randomly.

Pair Corralation between Geo and Mistras

Considering the 90-day investment horizon Geo Group is expected to generate 1.13 times more return on investment than Mistras. However, Geo is 1.13 times more volatile than Mistras Group. It trades about 0.08 of its potential returns per unit of risk. Mistras Group is currently generating about 0.05 per unit of risk. If you would invest  1,120  in Geo Group on October 12, 2024 and sell it today you would earn a total of  1,966  from holding Geo Group or generate 175.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Geo Group  vs.  Mistras Group

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.

Mistras Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mistras Group 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Geo and Mistras

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

The idea behind Geo Group and Mistras 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.