Correlation Between Check Point and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Check Point and Raytheon Technologies 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 Raytheon Technologies 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 Raytheon Technologies Corp, you can compare the effects of market volatilities on Check Point and Raytheon Technologies 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 Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Raytheon Technologies.
Diversification Opportunities for Check Point and Raytheon Technologies
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Check and Raytheon is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Raytheon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies 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 Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of Check Point i.e., Check Point and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Check Point and Raytheon Technologies
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.87 times more return on investment than Raytheon Technologies. However, Check Point Software is 1.14 times less risky than Raytheon Technologies. It trades about 0.13 of its potential returns per unit of risk. Raytheon Technologies Corp is currently generating about 0.0 per unit of risk. If you would invest 17,519 in Check Point Software on August 31, 2024 and sell it today you would earn a total of 660.00 from holding Check Point Software or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. Raytheon Technologies Corp
Performance |
| Timeline |
| Check Point Software |
| Raytheon Technologies |
Check Point and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Raytheon Technologies
The main advantage of trading using opposite Check Point and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Raytheon Technologies 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 Raytheon Technologies will offset losses from the drop in Raytheon Technologies' long position.| Check Point vs. Charter Communications Cl | Check Point vs. Tatton Asset Management | Check Point vs. Ecclesiastical Insurance Office | Check Point vs. Taylor Maritime Investments |
| Raytheon Technologies vs. Neometals | Raytheon Technologies vs. Coor Service Management | Raytheon Technologies vs. Aeorema Communications Plc | Raytheon Technologies vs. JLEN Environmental Assets |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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