Correlation Between Check Point and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both Check Point and Federal Agricultural 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 Federal Agricultural 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 Federal Agricultural Mortgage, you can compare the effects of market volatilities on Check Point and Federal Agricultural 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 Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Federal Agricultural.
Diversification Opportunities for Check Point and Federal Agricultural
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Check and Federal is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural 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 Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of Check Point i.e., Check Point and Federal Agricultural go up and down completely randomly.
Pair Corralation between Check Point and Federal Agricultural
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.99 times more return on investment than Federal Agricultural. However, Check Point Software is 1.01 times less risky than Federal Agricultural. It trades about 0.12 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about -0.11 per unit of risk. If you would invest 17,660 in Check Point Software on October 20, 2024 and sell it today you would earn a total of 475.00 from holding Check Point Software or generate 2.69% 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. Federal Agricultural Mortgage
Performance |
| Timeline |
| Check Point Software |
| Federal Agricultural |
Check Point and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Federal Agricultural
The main advantage of trading using opposite Check Point and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Federal Agricultural 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 Federal Agricultural will offset losses from the drop in Federal Agricultural's long position.| Check Point vs. Chuangs China Investments | Check Point vs. The Boston Beer | Check Point vs. National Beverage Corp | Check Point vs. SAN MIGUEL BREWERY |
| Federal Agricultural vs. CONTAGIOUS GAMING INC | Federal Agricultural vs. Penn National Gaming | Federal Agricultural vs. FRACTAL GAMING GROUP | Federal Agricultural vs. PENN NATL GAMING |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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