Correlation Between Check Point and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both Check Point and Liberty Broadband 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 Liberty Broadband 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 Liberty Broadband, you can compare the effects of market volatilities on Check Point and Liberty Broadband 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 Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Liberty Broadband.
Diversification Opportunities for Check Point and Liberty Broadband
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Check and Liberty is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Liberty Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband 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 Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband has no effect on the direction of Check Point i.e., Check Point and Liberty Broadband go up and down completely randomly.
Pair Corralation between Check Point and Liberty Broadband
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.56 times more return on investment than Liberty Broadband. However, Check Point Software is 1.78 times less risky than Liberty Broadband. It trades about 0.05 of its potential returns per unit of risk. Liberty Broadband is currently generating about 0.01 per unit of risk. If you would invest 12,512 in Check Point Software on September 3, 2024 and sell it today you would earn a total of 4,713 from holding Check Point Software or generate 37.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. Liberty Broadband
Performance |
| Timeline |
| Check Point Software |
| Liberty Broadband |
Check Point and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Liberty Broadband
The main advantage of trading using opposite Check Point and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Liberty Broadband 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 Liberty Broadband will offset losses from the drop in Liberty Broadband's long position.| Check Point vs. Alfa Financial Software | Check Point vs. ASURE SOFTWARE | Check Point vs. CPU SOFTWAREHOUSE | Check Point vs. USU Software AG |
| Liberty Broadband vs. STRAYER EDUCATION | Liberty Broadband vs. CARSALESCOM | Liberty Broadband vs. Grand Canyon Education | Liberty Broadband vs. CHINA TONTINE WINES |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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