Correlation Between Check Point and Litigation Capital
Can any of the company-specific risk be diversified away by investing in both Check Point and Litigation Capital 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 Litigation Capital 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 Litigation Capital Management, you can compare the effects of market volatilities on Check Point and Litigation Capital 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Litigation Capital.
Diversification Opportunities for Check Point and Litigation Capital
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Check and Litigation is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of Check Point i.e., Check Point and Litigation Capital go up and down completely randomly.
Pair Corralation between Check Point and Litigation Capital
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.68 times more return on investment than Litigation Capital. However, Check Point Software is 1.47 times less risky than Litigation Capital. It trades about -0.18 of its potential returns per unit of risk. Litigation Capital Management is currently generating about -0.19 per unit of risk. If you would invest 18,826 in Check Point Software on October 11, 2024 and sell it today you would lose (818.00) from holding Check Point Software or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Check Point Software vs. Litigation Capital Management
Performance |
| Timeline |
| Check Point Software |
| Litigation Capital |
Check Point and Litigation Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Litigation Capital
The main advantage of trading using opposite Check Point and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Litigation Capital 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 Litigation Capital will offset losses from the drop in Litigation Capital's long position.| Check Point vs. Gamma Communications PLC | Check Point vs. Automatic Data Processing | Check Point vs. CAP LEASE AVIATION | Check Point vs. Hochschild Mining plc |
| Litigation Capital vs. Orient Telecoms | Litigation Capital vs. Zoom Video Communications | Litigation Capital vs. Check Point Software | Litigation Capital vs. Compal Electronics GDR |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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