Correlation Between Check Point and Vishay Intertechnology

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

Diversification Opportunities for Check Point and Vishay Intertechnology

0.12

Correlation Coefficient

Check Point  Vishay Intertechnology

Average diversification

The 3 months correlation between Check and Vishay is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology 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 Vishay Intertechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Intertechnology has no effect on the direction of Check Point i.e., Check Point and Vishay Intertechnology go up and down completely randomly.

Pair Corralation between Check Point and Vishay Intertechnology

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.74 times more return on investment than Vishay Intertechnology. However, Check Point Software is 1.35 times less risky than Vishay Intertechnology. It trades about 0.16 of its potential returns per unit of risk. Vishay Intertechnology is currently generating about -0.03 per unit of risk. If you would invest  18,070  in Check Point Software on December 27, 2024 and sell it today you would earn a total of  3,130  from holding Check Point Software or generate 17.32% 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.  Vishay Intertechnology

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

Vishay Intertechnology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vishay Intertechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vishay Intertechnology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Check Point and Vishay Intertechnology

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

The idea behind Check Point Software and Vishay Intertechnology 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.

Check out your portfolio center.

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.