Correlation Between Iron Mountain and Check Point

Can any of the company-specific risk be diversified away by investing in both Iron Mountain 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 Iron Mountain and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iron Mountain Incorporated and Check Point Software, you can compare the effects of market volatilities on Iron Mountain 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 Iron Mountain with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Mountain and Check Point.

Diversification Opportunities for Iron Mountain and Check Point

-0.6

Correlation Coefficient

Iron Mountain  Check Point

Excellent diversification

The 3 months correlation between Iron and Check is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain Incorporated 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 Iron Mountain 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 Iron Mountain Incorporated 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 Iron Mountain i.e., Iron Mountain and Check Point go up and down completely randomly.

Pair Corralation between Iron Mountain and Check Point

Assuming the 90 days trading horizon Iron Mountain Incorporated is expected to under-perform the Check Point. In addition to that, Iron Mountain is 2.7 times more volatile than Check Point Software. It trades about -0.26 of its total potential returns per unit of risk. Check Point Software is currently generating about -0.35 per unit of volatility. If you would invest  58,754  in Check Point Software on October 23, 2024 and sell it today you would lose (1,464) from holding Check Point Software or give up 2.49% of portfolio value over 90 days.

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

Iron Mountain Incorporated  vs.  Check Point Software

Iron Mountain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron Mountain Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Check Point Software

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Check Point sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iron Mountain and Check Point

The main advantage of trading using opposite Iron Mountain and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Mountain 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.

The idea behind Iron Mountain Incorporated and Check Point Software 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.