Correlation Between Check Point and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Check Point and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on Check Point and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Ross Stores.
Diversification Opportunities for Check Point and Ross Stores
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Check and Ross is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Check Point i.e., Check Point and Ross Stores go up and down completely randomly.
Pair Corralation between Check Point and Ross Stores
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.67 times more return on investment than Ross Stores. However, Check Point Software is 1.49 times less risky than Ross Stores. It trades about 0.1 of its potential returns per unit of risk. Ross Stores is currently generating about -0.12 per unit of risk. If you would invest 57,095 in Check Point Software on October 11, 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. Ross Stores
Performance |
| Timeline |
| Check Point Software |
| Ross Stores |
Check Point and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Ross Stores
The main advantage of trading using opposite Check Point and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Check Point vs. Eastman Chemical | Check Point vs. Truist Financial | Check Point vs. LPL Financial Holdings | Check Point vs. Sumitomo Mitsui Financial |
| Ross Stores vs. Monster Beverage | Ross Stores vs. Align Technology | Ross Stores vs. Check Point Software | Ross Stores vs. Zebra Technologies |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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