Correlation Between Check Point and Annaly Capital
Can any of the company-specific risk be diversified away by investing in both Check Point and Annaly Capital 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 Annaly Capital 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 Annaly Capital Management,, you can compare the effects of market volatilities on Check Point and Annaly Capital 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 Annaly Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Annaly Capital.
Diversification Opportunities for Check Point and Annaly Capital
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Check and Annaly is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Annaly Capital Management, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Manag 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 Annaly Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annaly Capital Manag has no effect on the direction of Check Point i.e., Check Point and Annaly Capital go up and down completely randomly.
Pair Corralation between Check Point and Annaly Capital
Assuming the 90 days trading horizon Check Point Software is expected to generate 1.22 times more return on investment than Annaly Capital. However, Check Point is 1.22 times more volatile than Annaly Capital Management,. It trades about 0.29 of its potential returns per unit of risk. Annaly Capital Management, is currently generating about 0.08 per unit of risk. If you would invest 57,904 in Check Point Software on November 7, 2024 and sell it today you would earn a total of 5,588 from holding Check Point Software or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Check Point Software vs. Annaly Capital Management,
Performance |
| Timeline |
| Check Point Software |
| Annaly Capital Manag |
Check Point and Annaly Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Annaly Capital
The main advantage of trading using opposite Check Point and Annaly Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Annaly Capital 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 Annaly Capital will offset losses from the drop in Annaly Capital's long position.| Check Point vs. Monster Beverage | Check Point vs. Darden Restaurants, | Check Point vs. Extra Space Storage | Check Point vs. Eastman Chemical |
| Annaly Capital vs. Taiwan Semiconductor Manufacturing | Annaly Capital vs. Apple Inc | Annaly Capital vs. Alibaba Group Holding | Annaly Capital vs. Microsoft |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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