Correlation Between Check Point and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Check Point and Flow Traders 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 Flow Traders 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 Flow Traders NV, you can compare the effects of market volatilities on Check Point and Flow Traders 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 Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Flow Traders.
Diversification Opportunities for Check Point and Flow Traders
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Check and Flow is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV 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 Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Check Point i.e., Check Point and Flow Traders go up and down completely randomly.
Pair Corralation between Check Point and Flow Traders
Assuming the 90 days trading horizon Check Point is expected to generate 1.15 times less return on investment than Flow Traders. But when comparing it to its historical volatility, Check Point Software is 1.24 times less risky than Flow Traders. It trades about 0.21 of its potential returns per unit of risk. Flow Traders NV is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,148 in Flow Traders NV on December 30, 2024 and sell it today you would earn a total of 598.00 from holding Flow Traders NV or generate 27.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 95.38% |
Values | Daily Returns |
Check Point Software vs. Flow Traders NV
Performance |
Timeline |
Check Point Software |
Flow Traders NV |
Check Point and Flow Traders Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Check Point and Flow Traders
The main advantage of trading using opposite Check Point and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' long position.Check Point vs. DFS Furniture PLC | Check Point vs. Morgan Advanced Materials | Check Point vs. Universal Display Corp | Check Point vs. PureTech Health plc |
Flow Traders vs. Batm Advanced Communications | Flow Traders vs. Induction Healthcare Group | Flow Traders vs. Kaufman Et Broad | Flow Traders vs. HCA Healthcare |
Check out your portfolio center.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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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