Correlation Between Check Point and Gruppo MutuiOnline

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

By analyzing existing cross correlation between Check Point Software and Gruppo MutuiOnline SpA, you can compare the effects of market volatilities on Check Point and Gruppo MutuiOnline 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 Check Point with a short position of Gruppo MutuiOnline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Gruppo MutuiOnline.

Diversification Opportunities for Check Point and Gruppo MutuiOnline

0.51

Correlation Coefficient

Check Point  Gruppo MutuiOnline

Very weak diversification

The 3 months correlation between Check and Gruppo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Gruppo MutuiOnline SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gruppo MutuiOnline SpA and Check Point 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 Check Point Software are associated (or correlated) with Gruppo MutuiOnline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gruppo MutuiOnline SpA has no effect on the direction of Check Point i.e., Check Point and Gruppo MutuiOnline go up and down completely randomly.

Pair Corralation between Check Point and Gruppo MutuiOnline

Assuming the 90 days trading horizon Check Point Software is expected to under-perform the Gruppo MutuiOnline. But the stock apears to be less risky and, when comparing its historical volatility, Check Point Software is 1.62 times less risky than Gruppo MutuiOnline. The stock trades about -0.03 of its potential returns per unit of risk. The Gruppo MutuiOnline SpA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,277  in Gruppo MutuiOnline SpA on October 7, 2024 and sell it today you would earn a total of  384.00  from holding Gruppo MutuiOnline SpA or generate 11.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	42.86%
Values	Daily Returns

Check Point Software  vs.  Gruppo MutuiOnline SpA

Check Point Software

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gruppo MutuiOnline SpA

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Gruppo MutuiOnline SpA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Gruppo MutuiOnline unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Check Point and Gruppo MutuiOnline

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

The idea behind Check Point Software and Gruppo MutuiOnline SpA 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.