Correlation Between Check Point and Mercantile Investment
Can any of the company-specific risk be diversified away by investing in both Check Point and Mercantile Investment 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 Mercantile Investment 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 The Mercantile Investment, you can compare the effects of market volatilities on Check Point and Mercantile Investment 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 Mercantile Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Mercantile Investment.
Diversification Opportunities for Check Point and Mercantile Investment
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Check and Mercantile is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and The Mercantile Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Mercantile Investment 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 Mercantile Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Mercantile Investment has no effect on the direction of Check Point i.e., Check Point and Mercantile Investment go up and down completely randomly.
Pair Corralation between Check Point and Mercantile Investment
Assuming the 90 days trading horizon Check Point Software is expected to generate 1.23 times more return on investment than Mercantile Investment. However, Check Point is 1.23 times more volatile than The Mercantile Investment. It trades about 0.08 of its potential returns per unit of risk. The Mercantile Investment is currently generating about 0.05 per unit of risk. If you would invest 12,215 in Check Point Software on August 31, 2024 and sell it today you would earn a total of 5,964 from holding Check Point Software or generate 48.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.24% |
| Values | Daily Returns |
Check Point Software vs. The Mercantile Investment
Performance |
| Timeline |
| Check Point Software |
| The Mercantile Investment |
Check Point and Mercantile Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Mercantile Investment
The main advantage of trading using opposite Check Point and Mercantile Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Mercantile Investment 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 Mercantile Investment will offset losses from the drop in Mercantile Investment's long position.| Check Point vs. Charter Communications Cl | Check Point vs. Tatton Asset Management | Check Point vs. Ecclesiastical Insurance Office | Check Point vs. Taylor Maritime Investments |
| Mercantile Investment vs. Samsung Electronics Co | Mercantile Investment vs. Samsung Electronics Co | Mercantile Investment vs. Hyundai Motor | Mercantile Investment 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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