Correlation Between Check Point and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Check Point and Cincinnati Financial 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 Cincinnati Financial 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 Cincinnati Financial Corp, you can compare the effects of market volatilities on Check Point and Cincinnati Financial 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 Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Cincinnati Financial.
Diversification Opportunities for Check Point and Cincinnati Financial
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Check and Cincinnati is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Cincinnati Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial Corp 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 Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial Corp has no effect on the direction of Check Point i.e., Check Point and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Check Point and Cincinnati Financial
Assuming the 90 days trading horizon Check Point Software is expected to generate 1.07 times more return on investment than Cincinnati Financial. However, Check Point is 1.07 times more volatile than Cincinnati Financial Corp. It trades about 0.12 of its potential returns per unit of risk. Cincinnati Financial Corp is currently generating about 0.06 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. Cincinnati Financial Corp
Performance |
| Timeline |
| Check Point Software |
| Cincinnati Financial Corp |
Check Point and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Cincinnati Financial
The main advantage of trading using opposite Check Point and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Cincinnati Financial 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 Cincinnati Financial will offset losses from the drop in Cincinnati Financial'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 |
| Cincinnati Financial vs. Austevoll Seafood ASA | Cincinnati Financial vs. THAI BEVERAGE | Cincinnati Financial vs. Sixt Leasing SE | Cincinnati Financial vs. COFCO Joycome Foods |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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