Correlation Between GEO and Dow Jones
Can any of the company-specific risk be diversified away by investing in both GEO and Dow Jones 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 GEO and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The GEO Group and Dow Jones Industrial, you can compare the effects of market volatilities on GEO and Dow Jones 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 GEO with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEO and Dow Jones.
Diversification Opportunities for GEO and Dow Jones
Poor diversification
The 3 months correlation between GEO and Dow is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding The GEO Group and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and GEO 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 The GEO Group are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of GEO i.e., GEO and Dow Jones go up and down completely randomly.
Pair Corralation between GEO and Dow Jones
Assuming the 90 days horizon The GEO Group is expected to generate 5.73 times more return on investment than Dow Jones. However, GEO is 5.73 times more volatile than Dow Jones Industrial. It trades about 0.12 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.13 per unit of risk. If you would invest 960.00 in The GEO Group on August 25, 2024 and sell it today you would earn a total of 1,782 from holding The GEO Group or generate 185.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.81% |
| Values | Daily Returns |
The GEO Group vs. Dow Jones Industrial
Performance |
| Timeline |
GEO and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
The GEO Group
Pair trading matchups for GEO
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with GEO and Dow Jones
The main advantage of trading using opposite GEO and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEO position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| GEO vs. Welltower | GEO vs. Medical Properties Trust | GEO vs. Sabra Health Care | GEO vs. National Health Investors |
| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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