Correlation Between Check Point and Public Service
Can any of the company-specific risk be diversified away by investing in both Check Point and Public Service 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 Public Service 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 Public Service Enterprise, you can compare the effects of market volatilities on Check Point and Public Service 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 Public Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Public Service.
Diversification Opportunities for Check Point and Public Service
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Check and Public is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Public Service Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Service Enterprise 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 Public Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Service Enterprise has no effect on the direction of Check Point i.e., Check Point and Public Service go up and down completely randomly.
Pair Corralation between Check Point and Public Service
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.99 times more return on investment than Public Service. However, Check Point Software is 1.01 times less risky than Public Service. It trades about 0.07 of its potential returns per unit of risk. Public Service Enterprise is currently generating about -0.32 per unit of risk. If you would invest 18,413 in Check Point Software on September 24, 2024 and sell it today you would earn a total of 280.00 from holding Check Point Software or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. Public Service Enterprise
Performance |
| Timeline |
| Check Point Software |
| Public Service Enterprise |
Check Point and Public Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Public Service
The main advantage of trading using opposite Check Point and Public Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Public Service 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 Public Service will offset losses from the drop in Public Service's long position.| Check Point vs. Toyota Motor Corp | Check Point vs. SoftBank Group Corp | Check Point vs. OTP Bank Nyrt | Check Point vs. Freeport McMoRan |
| Public Service vs. Albion Technology General | Public Service vs. Ross Stores | Public Service vs. Check Point Software | Public Service vs. Allianz Technology Trust |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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