Correlation Between Check Point and SWISS WATER

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

Diversification Opportunities for Check Point and SWISS WATER

-0.83

Correlation Coefficient

Check Point  SWISS WATER

Pay attention - limited upside

The 3 months correlation between Check and SWISS is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and SWISS WATER DECAFFCOFFEE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISS WATER DECAFFCOFFEE 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 SWISS WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISS WATER DECAFFCOFFEE has no effect on the direction of Check Point i.e., Check Point and SWISS WATER go up and down completely randomly.

Pair Corralation between Check Point and SWISS WATER

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.54 times more return on investment than SWISS WATER. However, Check Point Software is 1.87 times less risky than SWISS WATER. It trades about 0.17 of its potential returns per unit of risk. SWISS WATER DECAFFCOFFEE is currently generating about -0.1 per unit of risk. If you would invest  17,885  in Check Point Software on December 29, 2024 and sell it today you would earn a total of  3,265  from holding Check Point Software or generate 18.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Check Point Software  vs.  SWISS WATER DECAFFCOFFEE

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 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Check Point displayed solid returns over the last few months and may actually be approaching a breakup point.

SWISS WATER DECAFFCOFFEE

Risk-Adjusted Performance

Very Weak

Over the last 90 days SWISS WATER DECAFFCOFFEE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Check Point and SWISS WATER

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

The idea behind Check Point Software and SWISS WATER DECAFFCOFFEE 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.