Correlation Between Check Point and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Check Point and Prudential Financial 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 Check Point and Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Check Point Software and Prudential Financial, you can compare the effects of market volatilities on Check Point and Prudential Financial 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 Check Point with a short position of Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Prudential Financial.
Diversification Opportunities for Check Point and Prudential Financial
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Check and Prudential is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial and Check Point 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 Check Point Software are associated (or correlated) with Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Check Point i.e., Check Point and Prudential Financial go up and down completely randomly.
Pair Corralation between Check Point and Prudential Financial
Assuming the 90 days trading horizon Check Point Software is expected to generate 1.06 times more return on investment than Prudential Financial. However, Check Point is 1.06 times more volatile than Prudential Financial. It trades about 0.23 of its potential returns per unit of risk. Prudential Financial is currently generating about -0.11 per unit of risk. 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 |
Check Point Software vs. Prudential Financial
Performance |
| Timeline |
| Check Point Software |
| Prudential Financial |
Check Point and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Prudential Financial
The main advantage of trading using opposite Check Point and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Prudential Financial 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.| Check Point vs. Roebuck Food Group | Check Point vs. Ebro Foods | Check Point vs. Associated British Foods | Check Point vs. Grieg Seafood |
| Prudential Financial vs. Check Point Software | Prudential Financial vs. Scandinavian Tobacco Group | Prudential Financial vs. Microchip Technology | Prudential Financial vs. Samsung Electronics Co |
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.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |