Correlation Between Check Point and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both Check Point and Aristocrat Leisure 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 Aristocrat Leisure 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 Aristocrat Leisure Limited, you can compare the effects of market volatilities on Check Point and Aristocrat Leisure 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 Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Aristocrat Leisure.
Diversification Opportunities for Check Point and Aristocrat Leisure
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Check and Aristocrat is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Aristocrat Leisure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure 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 Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of Check Point i.e., Check Point and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between Check Point and Aristocrat Leisure
Assuming the 90 days trading horizon Check Point Software is expected to generate 1.11 times more return on investment than Aristocrat Leisure. However, Check Point is 1.11 times more volatile than Aristocrat Leisure Limited. It trades about 0.47 of its potential returns per unit of risk. Aristocrat Leisure Limited is currently generating about 0.2 per unit of risk. If you would invest 17,360 in Check Point Software on November 7, 2024 and sell it today you would earn a total of 3,500 from holding Check Point Software or generate 20.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. Aristocrat Leisure Limited
Performance |
| Timeline |
| Check Point Software |
| Aristocrat Leisure |
Check Point and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Aristocrat Leisure
The main advantage of trading using opposite Check Point and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| Check Point vs. InPlay Oil Corp | Check Point vs. MAVEN WIRELESS SWEDEN | Check Point vs. ARISTOCRAT LEISURE | Check Point vs. FLOW TRADERS LTD |
| Aristocrat Leisure vs. Khiron Life Sciences | Aristocrat Leisure vs. KOBE STEEL LTD | Aristocrat Leisure vs. Harmony Gold Mining | Aristocrat Leisure vs. Calibre Mining Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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