Correlation Between Scientific Games and GEO
Can any of the company-specific risk be diversified away by investing in both Scientific Games 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 Scientific Games and GEO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scientific Games and The GEO Group, you can compare the effects of market volatilities on Scientific Games 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 Scientific Games with a short position of GEO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scientific Games and GEO.
Diversification Opportunities for Scientific Games and GEO
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Scientific and GEO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and The GEO Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEO Group and Scientific Games 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 Scientific Games 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 Scientific Games i.e., Scientific Games and GEO go up and down completely randomly.
Pair Corralation between Scientific Games and GEO
Assuming the 90 days horizon Scientific Games is expected to generate 17.32 times less return on investment than GEO. But when comparing it to its historical volatility, Scientific Games is 1.92 times less risky than GEO. It trades about 0.01 of its potential returns per unit of risk. The GEO Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,074 in The GEO Group on September 1, 2024 and sell it today you would earn a total of 1,582 from holding The GEO Group or generate 147.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scientific Games vs. The GEO Group
Performance |
| Timeline |
| Scientific Games |
| GEO Group |
Scientific Games and GEO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scientific Games and GEO
The main advantage of trading using opposite Scientific Games and GEO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scientific Games 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.| Scientific Games vs. InterContinental Hotels Group | Scientific Games vs. Marie Brizard Wine | Scientific Games vs. Hyatt Hotels | Scientific Games vs. HYATT HOTELS A |
| GEO vs. Hochschild Mining plc | GEO vs. FRACTAL GAMING GROUP | GEO vs. Scientific Games | GEO vs. VULCAN MATERIALS |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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