Correlation Between Check Point and Jefferies Financial
Can any of the company-specific risk be diversified away by investing in both Check Point and Jefferies Financial 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 Jefferies Financial 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 Jefferies Financial Group, you can compare the effects of market volatilities on Check Point and Jefferies Financial 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 Jefferies Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Jefferies Financial.
Diversification Opportunities for Check Point and Jefferies Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Check and Jefferies is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Jefferies Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jefferies Financial 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 Jefferies Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jefferies Financial has no effect on the direction of Check Point i.e., Check Point and Jefferies Financial go up and down completely randomly.
Pair Corralation between Check Point and Jefferies Financial
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.28 times more return on investment than Jefferies Financial. However, Check Point Software is 3.6 times less risky than Jefferies Financial. It trades about 0.1 of its potential returns per unit of risk. Jefferies Financial Group is currently generating about -0.22 per unit of risk. If you would invest 57,095 in Check Point Software on October 14, 2024 and sell it today you would earn a total of 809.00 from holding Check Point Software or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. Jefferies Financial Group
Performance |
| Timeline |
| Check Point Software |
| Jefferies Financial |
Check Point and Jefferies Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Jefferies Financial
The main advantage of trading using opposite Check Point and Jefferies Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Jefferies Financial 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 Jefferies Financial will offset losses from the drop in Jefferies Financial's long position.| Check Point vs. Delta Air Lines | Check Point vs. Charter Communications | Check Point vs. Marfrig Global Foods | Check Point vs. Pentair plc |
| Jefferies Financial vs. METISA Metalrgica Timboense | Jefferies Financial vs. Check Point Software | Jefferies Financial vs. MAHLE Metal Leve | Jefferies Financial vs. Align Technology |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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