Correlation Between Check Point and Inchcape PLC
Can any of the company-specific risk be diversified away by investing in both Check Point and Inchcape PLC 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 Inchcape PLC 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 Inchcape PLC, you can compare the effects of market volatilities on Check Point and Inchcape PLC 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 Inchcape PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Inchcape PLC.
Diversification Opportunities for Check Point and Inchcape PLC
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Check and Inchcape is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Inchcape PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inchcape PLC 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 Inchcape PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inchcape PLC has no effect on the direction of Check Point i.e., Check Point and Inchcape PLC go up and down completely randomly.
Pair Corralation between Check Point and Inchcape PLC
Assuming the 90 days trading horizon Check Point Software is expected to generate 1.27 times more return on investment than Inchcape PLC. However, Check Point is 1.27 times more volatile than Inchcape PLC. It trades about 0.08 of its potential returns per unit of risk. Inchcape PLC is currently generating about 0.0 per unit of risk. If you would invest 15,331 in Check Point Software on September 3, 2024 and sell it today you would earn a total of 2,871 from holding Check Point Software or generate 18.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.66% |
| Values | Daily Returns |
Check Point Software vs. Inchcape PLC
Performance |
| Timeline |
| Check Point Software |
| Inchcape PLC |
Check Point and Inchcape PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Inchcape PLC
The main advantage of trading using opposite Check Point and Inchcape PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Inchcape PLC 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 Inchcape PLC will offset losses from the drop in Inchcape PLC's long position.| Check Point vs. Toyota Motor Corp | Check Point vs. SoftBank Group Corp | Check Point vs. OTP Bank Nyrt | Check Point vs. Las Vegas Sands |
| Inchcape PLC vs. Games Workshop Group | Inchcape PLC vs. Veolia Environnement VE | Inchcape PLC vs. DFS Furniture PLC | Inchcape PLC vs. Eastman Chemical 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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