Correlation Between Amazon and Check Point
Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Check Point Software, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Check Point.
Diversification Opportunities for Amazon and Check Point
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Amazon and Check is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc 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 Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and Check Point go up and down completely randomly.
Pair Corralation between Amazon and Check Point
Assuming the 90 days trading horizon Amazon is expected to generate 2.6 times less return on investment than Check Point. But when comparing it to its historical volatility, Amazon Inc is 1.36 times less risky than Check Point. It trades about 0.2 of its potential returns per unit of risk. Check Point Software is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 17,475 in Check Point Software on November 9, 2024 and sell it today you would earn a total of 3,115 from holding Check Point Software or generate 17.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Check Point Software
Performance |
| Timeline |
| Amazon Inc |
| Check Point Software |
Amazon and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Check Point
The main advantage of trading using opposite Amazon and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.| Amazon vs. PLAYTIKA HOLDING DL 01 | Amazon vs. Playa Hotels Resorts | Amazon vs. HYATT HOTELS A | Amazon vs. ePlay Digital |
| Check Point vs. Zoom Video Communications | Check Point vs. Mitsui Chemicals | Check Point vs. PREMIER FOODS | Check Point vs. BG Foods |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |