Correlation Between Dow Jones and Check Point
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Check Point 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 Dow Jones and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Check Point Software, you can compare the effects of market volatilities on Dow Jones and Check Point 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 Dow Jones with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Check Point.
Diversification Opportunities for Dow Jones and Check Point
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and Check is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Check Point Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Point Software and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Check Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Point Software has no effect on the direction of Dow Jones i.e., Dow Jones and Check Point go up and down completely randomly.
Pair Corralation between Dow Jones and Check Point
Assuming the 90 days trading horizon Dow Jones is expected to generate 2.65 times less return on investment than Check Point. But when comparing it to its historical volatility, Dow Jones Industrial is 2.4 times less risky than Check Point. It trades about 0.11 of its potential returns per unit of risk. Check Point Software is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 33,766 in Check Point Software on October 8, 2024 and sell it today you would earn a total of 24,988 from holding Check Point Software or generate 74.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.96% |
Values | Daily Returns |
Dow Jones Industrial vs. Check Point Software
Performance |
Timeline |
Dow Jones and Check Point Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Check Point Software
Pair trading matchups for Check Point
Pair Trading with Dow Jones and Check Point
The main advantage of trading using opposite Dow Jones and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Check Point 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 Check Point will offset losses from the drop in Check Point's long position.Dow Jones vs. Apogee Therapeutics, Common | Dow Jones vs. Spyre Therapeutics | Dow Jones vs. Lion One Metals | Dow Jones vs. Vulcan Materials |
Check Point vs. Taiwan Semiconductor Manufacturing | Check Point vs. Apple Inc | Check Point vs. Alibaba Group Holding | Check Point vs. Banco Santander Chile |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |