Correlation Between CoreCivic and CatchMark Timber

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

By analyzing existing cross correlation between CoreCivic and CatchMark Timber Trust, you can compare the effects of market volatilities on CoreCivic and CatchMark Timber 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 CatchMark Timber. Check out your portfolio center. Please also check ongoing floating volatility patterns of CoreCivic and CatchMark Timber.

Diversification Opportunities for CoreCivic and CatchMark Timber

0.43

Correlation Coefficient

CoreCivic  CatchMark Timber

Very weak diversification

The 3 months correlation between CoreCivic and CatchMark is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding CoreCivic and CatchMark Timber Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CatchMark Timber Trust 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 CatchMark Timber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CatchMark Timber Trust has no effect on the direction of CoreCivic i.e., CoreCivic and CatchMark Timber go up and down completely randomly.

Pair Corralation between CoreCivic and CatchMark Timber

Considering the 90-day investment horizon CoreCivic is expected to generate 6.21 times less return on investment than CatchMark Timber. But when comparing it to its historical volatility, CoreCivic is 1.92 times less risky than CatchMark Timber. It trades about 0.02 of its potential returns per unit of risk. CatchMark Timber Trust is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  811.00  in CatchMark Timber Trust on January 20, 2024 and sell it today you would earn a total of  226.00  from holding CatchMark Timber Trust or generate 27.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	19.19%
Values	Daily Returns

CoreCivic  vs.  CatchMark Timber Trust

CoreCivic

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CoreCivic are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, CoreCivic is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CatchMark Timber Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CoreCivic and CatchMark Timber

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

The idea behind CoreCivic and CatchMark Timber Trust 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.