Correlation Between Check Point and BHP Group
Can any of the company-specific risk be diversified away by investing in both Check Point and BHP Group 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 BHP Group 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 BHP Group Limited, you can compare the effects of market volatilities on Check Point and BHP Group 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 BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and BHP Group.
Diversification Opportunities for Check Point and BHP Group
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Check and BHP is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited 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 BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of Check Point i.e., Check Point and BHP Group go up and down completely randomly.
Pair Corralation between Check Point and BHP Group
Assuming the 90 days trading horizon Check Point Software is expected to generate 1.04 times more return on investment than BHP Group. However, Check Point is 1.04 times more volatile than BHP Group Limited. It trades about 0.21 of its potential returns per unit of risk. BHP Group Limited is currently generating about 0.03 per unit of risk. If you would invest 17,908 in Check Point Software on September 14, 2024 and sell it today you would earn a total of 1,057 from holding Check Point Software or generate 5.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Check Point Software vs. BHP Group Limited
Performance |
| Timeline |
| Check Point Software |
| BHP Group Limited |
Check Point and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and BHP Group
The main advantage of trading using opposite Check Point and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.| Check Point vs. Trainline Plc | Check Point vs. Charter Communications Cl | Check Point vs. Roadside Real Estate | Check Point vs. Kaufman Et Broad |
| BHP Group vs. Check Point Software | BHP Group vs. Sabien Technology Group | BHP Group vs. Pfeiffer Vacuum Technology | BHP Group vs. MTI Wireless Edge |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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