Correlation Between Air Products and Check Point
Can any of the company-specific risk be diversified away by investing in both Air Products 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 Air Products and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products Chemicals and Check Point Software, you can compare the effects of market volatilities on Air Products 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 Air Products with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Check Point.
Diversification Opportunities for Air Products and Check Point
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Air and Check is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals 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 Air Products 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 Air Products Chemicals 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 Air Products i.e., Air Products and Check Point go up and down completely randomly.
Pair Corralation between Air Products and Check Point
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 4.82 times more return on investment than Check Point. However, Air Products is 4.82 times more volatile than Check Point Software. It trades about 0.05 of its potential returns per unit of risk. Check Point Software is currently generating about 0.1 per unit of risk. If you would invest 24,635 in Air Products Chemicals on November 28, 2024 and sell it today you would earn a total of 7,050 from holding Air Products Chemicals or generate 28.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.39% |
| Values | Daily Returns |
Air Products Chemicals vs. Check Point Software
Performance |
| Timeline |
| Air Products Chemicals |
| Check Point Software |
Air Products and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Check Point
The main advantage of trading using opposite Air Products and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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.| Air Products vs. Flutter Entertainment PLC | Air Products vs. LBG Media PLC | Air Products vs. Electronic Arts | Air Products vs. G5 Entertainment AB |
| Check Point vs. Jacquet Metal Service | Check Point vs. Science in Sport | Check Point vs. Fulcrum Metals PLC | Check Point vs. Tavistock Investments Plc |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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