Correlation Between CoreCivic and Steel Partners

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

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

Diversification Opportunities for CoreCivic and Steel Partners

0.39

Correlation Coefficient

CoreCivic  Steel Partners

Weak diversification

The 3 months correlation between CoreCivic and Steel is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CoreCivic and Steel Partners Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Partners Holdings 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 Steel Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Partners Holdings has no effect on the direction of CoreCivic i.e., CoreCivic and Steel Partners go up and down completely randomly.

Pair Corralation between CoreCivic and Steel Partners

Considering the 90-day investment horizon CoreCivic is expected to generate 4.31 times more return on investment than Steel Partners. However, CoreCivic is 4.31 times more volatile than Steel Partners Holdings. It trades about 0.04 of its potential returns per unit of risk. Steel Partners Holdings is currently generating about 0.18 per unit of risk. If you would invest  1,523  in CoreCivic on March 12, 2024 and sell it today you would earn a total of  19.00  from holding CoreCivic or generate 1.25% return on investment over 90 days.

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

CoreCivic  vs.  Steel Partners Holdings

CoreCivic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CoreCivic are ranked lower than 4 (%) 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.

Steel Partners Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Partners Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Steel Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CoreCivic and Steel Partners

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

The idea behind CoreCivic and Steel Partners Holdings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.