Correlation Between Check Point and XTANT MEDICAL

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

Diversification Opportunities for Check Point and XTANT MEDICAL

0.22

Correlation Coefficient

Check Point  XTANT MEDICAL

Modest diversification

The 3 months correlation between Check and XTANT is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and XTANT MEDICAL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTANT MEDICAL HLDGS 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 XTANT MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTANT MEDICAL HLDGS has no effect on the direction of Check Point i.e., Check Point and XTANT MEDICAL go up and down completely randomly.

Pair Corralation between Check Point and XTANT MEDICAL

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.44 times more return on investment than XTANT MEDICAL. However, Check Point Software is 2.3 times less risky than XTANT MEDICAL. It trades about 0.01 of its potential returns per unit of risk. XTANT MEDICAL HLDGS is currently generating about -0.06 per unit of risk. If you would invest  17,760  in Check Point Software on October 6, 2024 and sell it today you would earn a total of  30.00  from holding Check Point Software or generate 0.17% return on investment over 90 days.

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

Check Point Software  vs.  XTANT MEDICAL HLDGS

Check Point Software

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

XTANT MEDICAL HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Check Point and XTANT MEDICAL

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

The idea behind Check Point Software and XTANT MEDICAL HLDGS 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.