Correlation Between Citigroup and Check Point
Can any of the company-specific risk be diversified away by investing in both Citigroup 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 Citigroup and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Check Point Software, you can compare the effects of market volatilities on Citigroup 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 Citigroup with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Check Point.
Diversification Opportunities for Citigroup and Check Point
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and Check is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup 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 Citigroup 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 Citigroup 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 Citigroup i.e., Citigroup and Check Point go up and down completely randomly.
Pair Corralation between Citigroup and Check Point
Assuming the 90 days trading horizon Citigroup is expected to generate 2.14 times less return on investment than Check Point. But when comparing it to its historical volatility, Citigroup is 1.65 times less risky than Check Point. It trades about 0.2 of its potential returns per unit of risk. Check Point Software is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 17,613 in Check Point Software on September 13, 2024 and sell it today you would earn a total of 1,352 from holding Check Point Software or generate 7.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Check Point Software
Performance |
| Timeline |
| Citigroup |
| Check Point Software |
Citigroup and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Check Point
The main advantage of trading using opposite Citigroup and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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.| Citigroup vs. BE Semiconductor Industries | Citigroup vs. Accsys Technologies PLC | Citigroup vs. Eastinco Mining Exploration | Citigroup vs. Raytheon Technologies Corp |
| Check Point vs. Trainline Plc | Check Point vs. Charter Communications Cl | Check Point vs. Roadside Real Estate | Check Point vs. Kaufman Et Broad |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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