Correlation Between Check Point and CAP LEASE

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

Diversification Opportunities for Check Point and CAP LEASE

0.41

Correlation Coefficient

Check Point  CAP LEASE

Very weak diversification

The 3 months correlation between Check and CAP is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and CAP LEASE AVIATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAP LEASE AVIATION 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 CAP LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAP LEASE AVIATION has no effect on the direction of Check Point i.e., Check Point and CAP LEASE go up and down completely randomly.

Pair Corralation between Check Point and CAP LEASE

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.89 times more return on investment than CAP LEASE. However, Check Point Software is 1.12 times less risky than CAP LEASE. It trades about -0.02 of its potential returns per unit of risk. CAP LEASE AVIATION is currently generating about -0.21 per unit of risk. If you would invest  18,949  in Check Point Software on September 4, 2024 and sell it today you would lose (747.00) from holding Check Point Software or give up 3.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Check Point Software  vs.  CAP LEASE AVIATION

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.

CAP LEASE AVIATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAP LEASE AVIATION 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Check Point and CAP LEASE

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

The idea behind Check Point Software and CAP LEASE AVIATION 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.