Correlation Between Check Point and Delta Air

Can any of the company-specific risk be diversified away by investing in both Check Point and Delta Air 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 Delta Air 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 Delta Air Lines, you can compare the effects of market volatilities on Check Point and Delta Air 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 Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Delta Air.

Diversification Opportunities for Check Point and Delta Air

-0.45

Correlation Coefficient

Check Point  Delta Air

Very good diversification

The 3 months correlation between Check and Delta is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines 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 Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of Check Point i.e., Check Point and Delta Air go up and down completely randomly.

Pair Corralation between Check Point and Delta Air

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.64 times more return on investment than Delta Air. However, Check Point Software is 1.56 times less risky than Delta Air. It trades about 0.19 of its potential returns per unit of risk. Delta Air Lines is currently generating about -0.15 per unit of risk. If you would invest  18,910  in Check Point Software on December 22, 2024 and sell it today you would earn a total of  3,853  from holding Check Point Software or generate 20.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Check Point Software  vs.  Delta Air Lines

Check Point Software

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Check Point unveiled solid returns over the last few months and may actually be approaching a breakup point.

Delta Air Lines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Air Lines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Check Point and Delta Air

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

The idea behind Check Point Software and Delta Air Lines 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.