Correlation Between CoreCivic and Resideo Technologies
Can any of the company-specific risk be diversified away by investing in both CoreCivic and Resideo Technologies 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 CoreCivic and Resideo Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CoreCivic and Resideo Technologies, you can compare the effects of market volatilities on CoreCivic and Resideo Technologies 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 CoreCivic with a short position of Resideo Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CoreCivic and Resideo Technologies.
Diversification Opportunities for CoreCivic and Resideo Technologies
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CoreCivic and Resideo is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding CoreCivic and Resideo Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resideo Technologies and CoreCivic 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 CoreCivic are associated (or correlated) with Resideo Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resideo Technologies has no effect on the direction of CoreCivic i.e., CoreCivic and Resideo Technologies go up and down completely randomly.
Pair Corralation between CoreCivic and Resideo Technologies
Considering the 90-day investment horizon CoreCivic is expected to generate 1.39 times more return on investment than Resideo Technologies. However, CoreCivic is 1.39 times more volatile than Resideo Technologies. It trades about 0.06 of its potential returns per unit of risk. Resideo Technologies is currently generating about 0.07 per unit of risk. If you would invest 1,434 in CoreCivic on September 14, 2024 and sell it today you would earn a total of 739.50 from holding CoreCivic or generate 51.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
CoreCivic vs. Resideo Technologies
Performance |
| Timeline |
| CoreCivic |
| Resideo Technologies |
CoreCivic and Resideo Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CoreCivic and Resideo Technologies
The main advantage of trading using opposite CoreCivic and Resideo Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CoreCivic position performs unexpectedly, Resideo Technologies 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 Resideo Technologies will offset losses from the drop in Resideo Technologies' long position.| CoreCivic vs. ADT Inc | CoreCivic vs. NL Industries | CoreCivic vs. Mistras Group | CoreCivic vs. Evolv Technologies Holdings |
| Resideo Technologies vs. Allegion PLC | Resideo Technologies vs. MSA Safety | Resideo Technologies vs. NL Industries | Resideo Technologies vs. Brady |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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