Correlation Between Check Point and AGREE RLTY

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

Diversification Opportunities for Check Point and AGREE RLTY

0.08

Correlation Coefficient

Check Point  AGREE RLTY

Significant diversification

The 3 months correlation between Check and AGREE is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and AGREE RLTY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGREE RLTY P 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 AGREE RLTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGREE RLTY P has no effect on the direction of Check Point i.e., Check Point and AGREE RLTY go up and down completely randomly.

Pair Corralation between Check Point and AGREE RLTY

Assuming the 90 days trading horizon Check Point Software is expected to generate 1.32 times more return on investment than AGREE RLTY. However, Check Point is 1.32 times more volatile than AGREE RLTY P. It trades about 0.08 of its potential returns per unit of risk. AGREE RLTY P is currently generating about 0.04 per unit of risk. If you would invest  11,760  in Check Point Software on December 2, 2024 and sell it today you would earn a total of  9,270  from holding Check Point Software or generate 78.83% return on investment over 90 days.

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

Check Point Software  vs.  AGREE RLTY P

Check Point Software

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Check Point displayed solid returns over the last few months and may actually be approaching a breakup point.

AGREE RLTY P

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGREE RLTY P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AGREE RLTY is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Check Point and AGREE RLTY

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

The idea behind Check Point Software and AGREE RLTY P 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.