Correlation Between Check Point and Eco Animal
Can any of the company-specific risk be diversified away by investing in both Check Point and Eco Animal 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 Eco Animal 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 Eco Animal Health, you can compare the effects of market volatilities on Check Point and Eco Animal 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 Eco Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Eco Animal.
Diversification Opportunities for Check Point and Eco Animal
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Check and Eco is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Eco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Animal Health 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 Eco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Animal Health has no effect on the direction of Check Point i.e., Check Point and Eco Animal go up and down completely randomly.
Pair Corralation between Check Point and Eco Animal
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.56 times more return on investment than Eco Animal. However, Check Point Software is 1.77 times less risky than Eco Animal. It trades about 0.05 of its potential returns per unit of risk. Eco Animal Health is currently generating about -0.03 per unit of risk. If you would invest 13,354 in Check Point Software on August 26, 2024 and sell it today you would earn a total of 4,696 from holding Check Point Software or generate 35.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.98% |
| Values | Daily Returns |
Check Point Software vs. Eco Animal Health
Performance |
| Timeline |
| Check Point Software |
| Eco Animal Health |
Check Point and Eco Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Eco Animal
The main advantage of trading using opposite Check Point and Eco Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Eco Animal 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 Eco Animal will offset losses from the drop in Eco Animal's long position.| Check Point vs. Toyota Motor Corp | Check Point vs. SoftBank Group Corp | Check Point vs. OTP Bank Nyrt | Check Point vs. Yum Brands |
| Eco Animal vs. Samsung Electronics Co | Eco Animal vs. Samsung Electronics Co | Eco Animal vs. Hyundai Motor | Eco Animal vs. Toyota Motor Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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