Correlation Between Healthcare Trust and Geo

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

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

Diversification Opportunities for Healthcare Trust and Geo

0.66

Correlation Coefficient

Healthcare Trust  Geo

Poor diversification

The 3 months correlation between Healthcare and Geo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Trust and Geo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo Group and Healthcare Trust 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 Healthcare Trust 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 Healthcare Trust i.e., Healthcare Trust and Geo go up and down completely randomly.

Pair Corralation between Healthcare Trust and Geo

Considering the 90-day investment horizon Healthcare Trust is expected to generate 1.66 times less return on investment than Geo. But when comparing it to its historical volatility, Healthcare Trust is 1.71 times less risky than Geo. It trades about 0.07 of its potential returns per unit of risk. Geo Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  670.00  in Geo Group on January 20, 2024 and sell it today you would earn a total of  787.00  from holding Geo Group or generate 117.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	15.35%
Values	Daily Returns

Healthcare Trust  vs.  Geo Group

Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Healthcare Trust is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Geo Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Geo Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Geo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthcare Trust and Geo

The main advantage of trading using opposite Healthcare Trust and Geo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare Trust 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.

The idea behind Healthcare Trust and Geo Group 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.