Correlation Between Mistras and CoreCivic

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

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

Diversification Opportunities for Mistras and CoreCivic

-0.45

Correlation Coefficient

Mistras  CoreCivic

Very good diversification

The 3 months correlation between Mistras and CoreCivic is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and CoreCivic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreCivic and Mistras 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 Mistras Group are associated (or correlated) with CoreCivic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreCivic has no effect on the direction of Mistras i.e., Mistras and CoreCivic go up and down completely randomly.

Pair Corralation between Mistras and CoreCivic

Allowing for the 90-day total investment horizon Mistras Group is expected to generate 0.94 times more return on investment than CoreCivic. However, Mistras Group is 1.06 times less risky than CoreCivic. It trades about 0.13 of its potential returns per unit of risk. CoreCivic is currently generating about -0.03 per unit of risk. If you would invest  899.00  in Mistras Group on December 29, 2024 and sell it today you would earn a total of  161.00  from holding Mistras Group or generate 17.91% return on investment over 90 days.

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

Mistras Group  vs.  CoreCivic

Mistras Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mistras Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Mistras reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Mistras and CoreCivic

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

The idea behind Mistras Group and CoreCivic 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.