Correlation Between Ebro Foods and Check Point
Can any of the company-specific risk be diversified away by investing in both Ebro Foods 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 Ebro Foods and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Check Point Software, you can compare the effects of market volatilities on Ebro Foods 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 Ebro Foods with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Check Point.
Diversification Opportunities for Ebro Foods and Check Point
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ebro and Check is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods 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 Ebro Foods 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 Ebro Foods 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 Ebro Foods i.e., Ebro Foods and Check Point go up and down completely randomly.
Pair Corralation between Ebro Foods and Check Point
Assuming the 90 days trading horizon Ebro Foods is expected to under-perform the Check Point. But the stock apears to be less risky and, when comparing its historical volatility, Ebro Foods is 2.77 times less risky than Check Point. The stock trades about -0.12 of its potential returns per unit of risk. The Check Point Software is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 17,684 in Check Point Software on September 15, 2024 and sell it today you would earn a total of 1,124 from holding Check Point Software or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ebro Foods vs. Check Point Software
Performance |
| Timeline |
| Ebro Foods |
| Check Point Software |
Ebro Foods and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Check Point
The main advantage of trading using opposite Ebro Foods and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods 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.| Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Samsung Electronics Co | Ebro Foods vs. Hyundai Motor | Ebro Foods vs. Reliance Industries Ltd |
| Check Point vs. Roebuck Food Group | Check Point vs. Ebro Foods | Check Point vs. Associated British Foods | Check Point vs. Grieg Seafood |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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