Correlation Between Performant Financial and CoreCivic

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

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

Diversification Opportunities for Performant Financial and CoreCivic

-0.72

Correlation Coefficient

Performant Financial  CoreCivic

Pay attention - limited upside

The 3 months correlation between Performant and CoreCivic is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Performant Financial and CoreCivic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreCivic and Performant Financial 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 Performant Financial 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 Performant Financial i.e., Performant Financial and CoreCivic go up and down completely randomly.

Pair Corralation between Performant Financial and CoreCivic

Given the investment horizon of 90 days Performant Financial is expected to under-perform the CoreCivic. But the stock apears to be less risky and, when comparing its historical volatility, Performant Financial is 1.68 times less risky than CoreCivic. The stock trades about -0.02 of its potential returns per unit of risk. The CoreCivic is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,324  in CoreCivic on September 2, 2024 and sell it today you would earn a total of  909.00  from holding CoreCivic or generate 68.66% return on investment over 90 days.

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

Performant Financial  vs.  CoreCivic

Performant Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Performant Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Performant Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

CoreCivic

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CoreCivic are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, CoreCivic showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Performant Financial and CoreCivic

The main advantage of trading using opposite Performant Financial and CoreCivic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performant Financial 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 Performant Financial 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.