Correlation Between Group 1 and Civeo Corp

Can any of the company-specific risk be diversified away by investing in both Group 1 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 Group 1 and Civeo Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Group 1 Automotive and Civeo Corp, you can compare the effects of market volatilities on Group 1 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 Group 1 with a short position of Civeo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 1 and Civeo Corp.

Diversification Opportunities for Group 1 and Civeo Corp

-0.87

Correlation Coefficient

Group 1  Civeo Corp

Pay attention - limited upside

The 3 months correlation between Group and Civeo is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Group 1 Automotive and Civeo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civeo Corp and Group 1 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 Group 1 Automotive 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 Group 1 i.e., Group 1 and Civeo Corp go up and down completely randomly.

Pair Corralation between Group 1 and Civeo Corp

Considering the 90-day investment horizon Group 1 Automotive is expected to generate 0.69 times more return on investment than Civeo Corp. However, Group 1 Automotive is 1.44 times less risky than Civeo Corp. It trades about -0.02 of its potential returns per unit of risk. Civeo Corp is currently generating about -0.15 per unit of risk. If you would invest  42,533  in Group 1 Automotive on September 30, 2024 and sell it today you would lose (219.00) from holding Group 1 Automotive or give up 0.51% of portfolio value over 90 days.

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

Group 1 Automotive  vs.  Civeo Corp

Group 1 Automotive

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Group 1 Automotive are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Group 1 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Civeo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Civeo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Group 1 and Civeo Corp

The main advantage of trading using opposite Group 1 and Civeo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 1 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 Group 1 Automotive 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.