Correlation Between Check Point and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Check Point and Automatic Data 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 Automatic Data 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 Automatic Data Processing, you can compare the effects of market volatilities on Check Point and Automatic Data 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 Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Automatic Data.
Diversification Opportunities for Check Point and Automatic Data
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Check and Automatic is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Check Point i.e., Check Point and Automatic Data go up and down completely randomly.
Pair Corralation between Check Point and Automatic Data
Assuming the 90 days trading horizon Check Point Software is expected to generate 1.26 times more return on investment than Automatic Data. However, Check Point is 1.26 times more volatile than Automatic Data Processing. It trades about 0.07 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.07 per unit of risk. If you would invest 12,730 in Check Point Software on September 4, 2024 and sell it today you would earn a total of 4,700 from holding Check Point Software or generate 36.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.66% |
| Values | Daily Returns |
Check Point Software vs. Automatic Data Processing
Performance |
| Timeline |
| Check Point Software |
| Automatic Data Processing |
Check Point and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Automatic Data
The main advantage of trading using opposite Check Point and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| Check Point vs. TOTAL GABON | Check Point vs. Walgreens Boots Alliance | Check Point vs. Peak Resources Limited |
| Automatic Data vs. EEDUCATION ALBERT AB | Automatic Data vs. SCANDMEDICAL SOLDK 040 | Automatic Data vs. Siamgas And Petrochemicals | Automatic Data vs. MEDICAL FACILITIES NEW |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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