Correlation Between CoreCivic and Veralto

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

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

Diversification Opportunities for CoreCivic and Veralto

-0.54

Correlation Coefficient

CoreCivic  Veralto

Excellent diversification

The 3 months correlation between CoreCivic and Veralto is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CoreCivic and Veralto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veralto 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 Veralto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veralto has no effect on the direction of CoreCivic i.e., CoreCivic and Veralto go up and down completely randomly.

Pair Corralation between CoreCivic and Veralto

Considering the 90-day investment horizon CoreCivic is expected to generate 5.62 times more return on investment than Veralto. However, CoreCivic is 5.62 times more volatile than Veralto. It trades about 0.23 of its potential returns per unit of risk. Veralto is currently generating about -0.1 per unit of risk. If you would invest  1,261  in CoreCivic on September 4, 2024 and sell it today you would earn a total of  903.00  from holding CoreCivic or generate 71.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CoreCivic  vs.  Veralto

CoreCivic

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CoreCivic are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, CoreCivic showed solid returns over the last few months and may actually be approaching a breakup point.

Veralto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veralto has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Veralto is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CoreCivic and Veralto

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

The idea behind CoreCivic and Veralto 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 Global Correlations module to find global opportunities by holding instruments from different markets.