Correlation Between Check Point and H+M HEN+MAUUNSPADR

Can any of the company-specific risk be diversified away by investing in both Check Point and H+M HEN+MAUUNSPADR 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 H+M HEN+MAUUNSPADR 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 HM HENMAUUNSPADR 15, you can compare the effects of market volatilities on Check Point and H+M HEN+MAUUNSPADR 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 H+M HEN+MAUUNSPADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and H+M HEN+MAUUNSPADR.

Diversification Opportunities for Check Point and H+M HEN+MAUUNSPADR

-0.1

Correlation Coefficient

Check Point  H+M HEN+MAUUNSPADR

Good diversification

The 3 months correlation between Check and H+M is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and HM HENMAUUNSPADR 15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H+M HEN+MAUUNSPADR 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 H+M HEN+MAUUNSPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H+M HEN+MAUUNSPADR has no effect on the direction of Check Point i.e., Check Point and H+M HEN+MAUUNSPADR go up and down completely randomly.

Pair Corralation between Check Point and H+M HEN+MAUUNSPADR

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.9 times more return on investment than H+M HEN+MAUUNSPADR. However, Check Point Software is 1.11 times less risky than H+M HEN+MAUUNSPADR. It trades about 0.17 of its potential returns per unit of risk. HM HENMAUUNSPADR 15 is currently generating about -0.04 per unit of risk. If you would invest  17,885  in Check Point Software on December 28, 2024 and sell it today you would earn a total of  3,315  from holding Check Point Software or generate 18.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Check Point Software  vs.  HM HENMAUUNSPADR 15

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 unsteady basic indicators, Check Point displayed solid returns over the last few months and may actually be approaching a breakup point.

H+M HEN+MAUUNSPADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days HM HENMAUUNSPADR 15 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, H+M HEN+MAUUNSPADR is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Check Point and H+M HEN+MAUUNSPADR

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

The idea behind Check Point Software and HM HENMAUUNSPADR 15 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.