Correlation Between Team and Geo

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

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

Diversification Opportunities for Team and Geo

-0.67

Correlation Coefficient

Team  Geo

Excellent diversification

The 3 months correlation between Team and Geo is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Team Inc and Geo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo Group and Team 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 Team Inc are associated (or correlated) with Geo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Group has no effect on the direction of Team i.e., Team and Geo go up and down completely randomly.

Pair Corralation between Team and Geo

Given the investment horizon of 90 days Team Inc is expected to generate 1.8 times more return on investment than Geo. However, Team is 1.8 times more volatile than Geo Group. It trades about 0.2 of its potential returns per unit of risk. Geo Group is currently generating about 0.32 per unit of risk. If you would invest  1,529  in Team Inc on October 25, 2024 and sell it today you would earn a total of  296.50  from holding Team Inc or generate 19.39% return on investment over 90 days.

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

Team Inc  vs.  Geo Group

Team Inc

Risk-Adjusted Performance

1 of 100

Weak

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

Geo Group

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Geo Group are ranked lower than 18 (%) 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.

Pair Trading with Team and Geo

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

The idea behind Team Inc and Geo 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.