Correlation Between Check Point and Genuine Parts
Can any of the company-specific risk be diversified away by investing in both Check Point and Genuine Parts 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 Genuine Parts 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 Genuine Parts, you can compare the effects of market volatilities on Check Point and Genuine Parts 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 Genuine Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Genuine Parts.
Diversification Opportunities for Check Point and Genuine Parts
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Check and Genuine is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Genuine Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts 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 Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of Check Point i.e., Check Point and Genuine Parts go up and down completely randomly.
Pair Corralation between Check Point and Genuine Parts
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.81 times more return on investment than Genuine Parts. However, Check Point Software is 1.24 times less risky than Genuine Parts. It trades about 0.08 of its potential returns per unit of risk. Genuine Parts is currently generating about -0.01 per unit of risk. If you would invest 11,435 in Check Point Software on September 3, 2024 and sell it today you would earn a total of 5,790 from holding Check Point Software or generate 50.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. Genuine Parts
Performance |
| Timeline |
| Check Point Software |
| Genuine Parts |
Check Point and Genuine Parts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Genuine Parts
The main advantage of trading using opposite Check Point and Genuine Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Genuine Parts 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 Genuine Parts will offset losses from the drop in Genuine Parts' long position.| Check Point vs. Alfa Financial Software | Check Point vs. ASURE SOFTWARE | Check Point vs. CPU SOFTWAREHOUSE | Check Point vs. USU Software AG |
| Genuine Parts vs. The Hanover Insurance | Genuine Parts vs. Check Point Software | Genuine Parts vs. MACOM Technology Solutions | Genuine Parts vs. PT Bank Maybank |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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