Correlation Between Check Point and JD Sports
Can any of the company-specific risk be diversified away by investing in both Check Point and JD Sports 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 JD Sports 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 JD Sports Fashion, you can compare the effects of market volatilities on Check Point and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and JD Sports.
Diversification Opportunities for Check Point and JD Sports
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Check and JD Sports is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Check Point i.e., Check Point and JD Sports go up and down completely randomly.
Pair Corralation between Check Point and JD Sports
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.5 times more return on investment than JD Sports. However, Check Point Software is 1.99 times less risky than JD Sports. It trades about 0.07 of its potential returns per unit of risk. JD Sports Fashion is currently generating about 0.0 per unit of risk. If you would invest 12,645 in Check Point Software on September 12, 2024 and sell it today you would earn a total of 6,181 from holding Check Point Software or generate 48.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.39% |
| Values | Daily Returns |
Check Point Software vs. JD Sports Fashion
Performance |
| Timeline |
| Check Point Software |
| JD Sports Fashion |
Check Point and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and JD Sports
The main advantage of trading using opposite Check Point and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Check Point vs. Extra Space Storage | Check Point vs. Eastinco Mining Exploration | Check Point vs. Teradata Corp | Check Point vs. Southwest Airlines Co |
| JD Sports vs. National Atomic Co | JD Sports vs. OTP Bank Nyrt | JD Sports vs. Samsung Electronics Co | JD Sports vs. Samsung Electronics 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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