Correlation Between Check Point and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Check Point and Coca Cola 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 Coca Cola 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 The Coca Cola, you can compare the effects of market volatilities on Check Point and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Coca Cola.
Diversification Opportunities for Check Point and Coca Cola
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Check and Coca is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of Check Point i.e., Check Point and Coca Cola go up and down completely randomly.
Pair Corralation between Check Point and Coca Cola
Assuming the 90 days trading horizon Check Point Software is expected to generate 1.73 times more return on investment than Coca Cola. However, Check Point is 1.73 times more volatile than The Coca Cola. It trades about 0.05 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.02 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. The Coca Cola
Performance |
| Timeline |
| Check Point Software |
| Coca Cola |
Check Point and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Coca Cola
The main advantage of trading using opposite Check Point and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola'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 |
| Coca Cola vs. IMPERIAL TOBACCO | Coca Cola vs. ALGOMA STEEL GROUP | Coca Cola vs. JAPAN TOBACCO UNSPADR12 | Coca Cola 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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