Correlation Between Check Point and Cognyte Software
Can any of the company-specific risk be diversified away by investing in both Check Point and Cognyte Software 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 Cognyte Software 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 Cognyte Software, you can compare the effects of market volatilities on Check Point and Cognyte Software 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 Cognyte Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Cognyte Software.
Diversification Opportunities for Check Point and Cognyte Software
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Check and Cognyte is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Cognyte Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognyte Software 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 Cognyte Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognyte Software has no effect on the direction of Check Point i.e., Check Point and Cognyte Software go up and down completely randomly.
Pair Corralation between Check Point and Cognyte Software
Given the investment horizon of 90 days Check Point Software is expected to under-perform the Cognyte Software. But the stock apears to be less risky and, when comparing its historical volatility, Check Point Software is 1.41 times less risky than Cognyte Software. The stock trades about -0.03 of its potential returns per unit of risk. The Cognyte Software is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 670.00 in Cognyte Software on October 26, 2024 and sell it today you would earn a total of 280.00 from holding Cognyte Software or generate 41.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. Cognyte Software
Performance |
| Timeline |
| Check Point Software |
| Cognyte Software |
Check Point and Cognyte Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Cognyte Software
The main advantage of trading using opposite Check Point and Cognyte Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Cognyte Software 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 Cognyte Software will offset losses from the drop in Cognyte Software's long position.| Check Point vs. Rapid7 Inc | Check Point vs. Tenable Holdings | Check Point vs. Okta Inc | Check Point vs. WixCom |
| Cognyte Software vs. CSG Systems International | Cognyte Software vs. Evertec | Cognyte Software vs. Varonis Systems | Cognyte Software vs. Radware |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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