Correlation Between Automatic Data and Check Point
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Check Point 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 Automatic Data and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Data Processing and Check Point Software, you can compare the effects of market volatilities on Automatic Data and Check Point 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 Automatic Data with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Check Point.
Diversification Opportunities for Automatic Data and Check Point
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Automatic and Check is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Check Point Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Point Software and Automatic Data 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 Automatic Data Processing are associated (or correlated) with Check Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Point Software has no effect on the direction of Automatic Data i.e., Automatic Data and Check Point go up and down completely randomly.
Pair Corralation between Automatic Data and Check Point
Assuming the 90 days horizon Automatic Data is expected to generate 1.59 times less return on investment than Check Point. But when comparing it to its historical volatility, Automatic Data Processing is 1.16 times less risky than Check Point. It trades about 0.04 of its potential returns per unit of risk. Check Point Software is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12,512 in Check Point Software on September 3, 2024 and sell it today you would earn a total of 4,713 from holding Check Point Software or generate 37.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. Check Point Software
Performance |
| Timeline |
| Automatic Data Processing |
| Check Point Software |
Automatic Data and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Check Point
The main advantage of trading using opposite Automatic Data and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Check Point 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 Check Point will offset losses from the drop in Check Point's long position.| Automatic Data vs. DFS Furniture PLC | Automatic Data vs. KOOL2PLAY SA ZY | Automatic Data vs. ITALIAN WINE BRANDS | Automatic Data vs. ePlay Digital |
| Check Point vs. Alfa Financial Software | Check Point vs. ASURE SOFTWARE | Check Point vs. CPU SOFTWAREHOUSE | Check Point vs. USU Software AG |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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