Correlation Between Check Point and EVS Broadcast
Can any of the company-specific risk be diversified away by investing in both Check Point and EVS Broadcast 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 EVS Broadcast 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 EVS Broadcast Equipment, you can compare the effects of market volatilities on Check Point and EVS Broadcast 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 EVS Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and EVS Broadcast.
Diversification Opportunities for Check Point and EVS Broadcast
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Check and EVS is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment 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 EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of Check Point i.e., Check Point and EVS Broadcast go up and down completely randomly.
Pair Corralation between Check Point and EVS Broadcast
Assuming the 90 days trading horizon Check Point Software is expected to generate 1.87 times more return on investment than EVS Broadcast. However, Check Point is 1.87 times more volatile than EVS Broadcast Equipment. It trades about 0.03 of its potential returns per unit of risk. EVS Broadcast Equipment is currently generating about 0.05 per unit of risk. If you would invest 17,155 in Check Point Software on September 12, 2024 and sell it today you would earn a total of 560.00 from holding Check Point Software or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. EVS Broadcast Equipment
Performance |
| Timeline |
| Check Point Software |
| EVS Broadcast Equipment |
Check Point and EVS Broadcast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and EVS Broadcast
The main advantage of trading using opposite Check Point and EVS Broadcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, EVS Broadcast 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 EVS Broadcast will offset losses from the drop in EVS Broadcast's long position.| Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc |
| EVS Broadcast vs. FIREWEED METALS P | EVS Broadcast vs. UPDATE SOFTWARE | EVS Broadcast vs. Magic Software Enterprises | EVS Broadcast vs. Check Point Software |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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