Correlation Between Check Point and NN Group
Can any of the company-specific risk be diversified away by investing in both Check Point and NN Group 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 NN Group 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 NN Group NV, you can compare the effects of market volatilities on Check Point and NN Group 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 NN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and NN Group.
Diversification Opportunities for Check Point and NN Group
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Check and 2NN is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV 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 NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of Check Point i.e., Check Point and NN Group go up and down completely randomly.
Pair Corralation between Check Point and NN Group
Assuming the 90 days trading horizon Check Point Software is expected to generate 2.02 times more return on investment than NN Group. However, Check Point is 2.02 times more volatile than NN Group NV. It trades about 0.0 of its potential returns per unit of risk. NN Group NV is currently generating about -0.03 per unit of risk. If you would invest 17,805 in Check Point Software on October 8, 2024 and sell it today you would lose (15.00) from holding Check Point Software or give up 0.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. NN Group NV
Performance |
| Timeline |
| Check Point Software |
| NN Group NV |
Check Point and NN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and NN Group
The main advantage of trading using opposite Check Point and NN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, NN Group 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 NN Group will offset losses from the drop in NN Group's long position.| Check Point vs. ARDAGH METAL PACDL 0001 | Check Point vs. Perseus Mining Limited | Check Point vs. ON SEMICONDUCTOR | Check Point vs. INDUSTRIAL MINERALS LTD |
| NN Group vs. China Resources Beer | NN Group vs. New Residential Investment | NN Group vs. CDL INVESTMENT | NN Group vs. Japan Asia Investment |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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