Correlation Between Geo and Healthcare Realty

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

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

Diversification Opportunities for Geo and Healthcare Realty

-0.44

Correlation Coefficient

Geo  Healthcare Realty

Very good diversification

The 3 months correlation between Geo and Healthcare is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Geo Group and Healthcare Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Realty Trust 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 Geo Group are associated (or correlated) with Healthcare Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Realty Trust has no effect on the direction of Geo i.e., Geo and Healthcare Realty go up and down completely randomly.

Pair Corralation between Geo and Healthcare Realty

Considering the 90-day investment horizon Geo Group is expected to generate 1.51 times more return on investment than Healthcare Realty. However, Geo is 1.51 times more volatile than Healthcare Realty Trust. It trades about 0.07 of its potential returns per unit of risk. Healthcare Realty Trust is currently generating about -0.02 per unit of risk. If you would invest  830.00  in Geo Group on January 26, 2024 and sell it today you would earn a total of  677.00  from holding Geo Group or generate 81.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.73%
Values	Daily Returns

Geo Group  vs.  Healthcare Realty Trust

Geo Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Geo Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Geo displayed solid returns over the last few months and may actually be approaching a breakup point.

Healthcare Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthcare Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Geo and Healthcare Realty

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

The idea behind Geo Group and Healthcare Realty 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.