Correlation Between Check Point and Identiv

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

Diversification Opportunities for Check Point and Identiv

0.03

Correlation Coefficient

Check Point  Identiv

Significant diversification

The 3 months correlation between Check and Identiv is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv 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 Identiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identiv has no effect on the direction of Check Point i.e., Check Point and Identiv go up and down completely randomly.

Pair Corralation between Check Point and Identiv

Assuming the 90 days trading horizon Check Point is expected to generate 2.54 times less return on investment than Identiv. But when comparing it to its historical volatility, Check Point Software is 2.36 times less risky than Identiv. It trades about 0.12 of its potential returns per unit of risk. Identiv is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  354.00  in Identiv on October 20, 2024 and sell it today you would earn a total of  23.00  from holding Identiv or generate 6.5% 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.  Identiv

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 very healthy basic indicators, Check Point is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Identiv

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Identiv reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Check Point and Identiv

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

The idea behind Check Point Software and Identiv 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.