Correlation Between SQ Old and Check Point

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

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

Diversification Opportunities for SQ Old and Check Point

0.0

Correlation Coefficient

SQ Old  Check Point

Pay attention - limited upside

The 3 months correlation between SQ Old and Check is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SQ Old 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 SQ Old 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 SQ Old 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 SQ Old i.e., SQ Old and Check Point go up and down completely randomly.

Pair Corralation between SQ Old and Check Point

If you would invest  18,790  in Check Point Software on December 27, 2024 and sell it today you would earn a total of  3,997  from holding Check Point Software or generate 21.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SQ Old  vs.  Check Point Software

SQ Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days SQ Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SQ Old is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

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 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward-looking signals, Check Point reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SQ Old and Check Point

The main advantage of trading using opposite SQ Old and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SQ Old 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 SQ Old 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.