Correlation Between Host Hotels and Check Point
Can any of the company-specific risk be diversified away by investing in both Host Hotels 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 Host Hotels and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Host Hotels Resorts and Check Point Software, you can compare the effects of market volatilities on Host Hotels 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 Host Hotels with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Check Point.
Diversification Opportunities for Host Hotels and Check Point
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Host and Check is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts 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 Host Hotels 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 Host Hotels Resorts 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 Host Hotels i.e., Host Hotels and Check Point go up and down completely randomly.
Pair Corralation between Host Hotels and Check Point
Assuming the 90 days trading horizon Host Hotels is expected to generate 3.81 times less return on investment than Check Point. In addition to that, Host Hotels is 1.1 times more volatile than Check Point Software. It trades about 0.02 of its total potential returns per unit of risk. Check Point Software is currently generating about 0.09 per unit of volatility. If you would invest 12,630 in Check Point Software on November 29, 2024 and sell it today you would earn a total of 9,296 from holding Check Point Software or generate 73.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Host Hotels Resorts vs. Check Point Software
Performance |
| Timeline |
| Host Hotels Resorts |
| Check Point Software |
Host Hotels and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Check Point
The main advantage of trading using opposite Host Hotels and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels 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.| Host Hotels vs. Bigblu Broadband PLC | Host Hotels vs. Teradata Corp | Host Hotels vs. Gaztransport et Technigaz | Host Hotels vs. Extra Space Storage |
| Check Point vs. Raytheon Technologies Corp | Check Point vs. Dentsply Sirona | Check Point vs. Made Tech Group | Check Point vs. Optima Health 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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