Correlation Between Check Point and Livermore Investments
Can any of the company-specific risk be diversified away by investing in both Check Point and Livermore Investments 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 Livermore Investments 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 Livermore Investments Group, you can compare the effects of market volatilities on Check Point and Livermore Investments 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 Livermore Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Livermore Investments.
Diversification Opportunities for Check Point and Livermore Investments
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Check and Livermore is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Livermore Investments Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livermore Investments 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 Livermore Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livermore Investments has no effect on the direction of Check Point i.e., Check Point and Livermore Investments go up and down completely randomly.
Pair Corralation between Check Point and Livermore Investments
Assuming the 90 days trading horizon Check Point Software is expected to under-perform the Livermore Investments. In addition to that, Check Point is 4.45 times more volatile than Livermore Investments Group. It trades about -0.17 of its total potential returns per unit of risk. Livermore Investments Group is currently generating about 0.13 per unit of volatility. If you would invest 4,410 in Livermore Investments Group on August 28, 2024 and sell it today you would earn a total of 90.00 from holding Livermore Investments Group or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. Livermore Investments Group
Performance |
| Timeline |
| Check Point Software |
| Livermore Investments |
Check Point and Livermore Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Livermore Investments
The main advantage of trading using opposite Check Point and Livermore Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Livermore Investments 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 Livermore Investments will offset losses from the drop in Livermore Investments' long position.| Check Point vs. Toyota Motor Corp | Check Point vs. OTP Bank Nyrt | Check Point vs. Yum Brands | Check Point vs. Cognizant Technology Solutions |
| Livermore Investments vs. Catalyst Media Group | Livermore Investments vs. Oncimmune Holdings plc | Livermore Investments vs. Invesco Health Care | Livermore Investments vs. Coor Service Management |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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