Correlation Between Check Point and Harley Davidson
Can any of the company-specific risk be diversified away by investing in both Check Point and Harley Davidson 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 Harley Davidson 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 Harley Davidson, you can compare the effects of market volatilities on Check Point and Harley Davidson 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 Harley Davidson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Harley Davidson.
Diversification Opportunities for Check Point and Harley Davidson
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Check and Harley is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Harley Davidson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harley Davidson 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 Harley Davidson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harley Davidson has no effect on the direction of Check Point i.e., Check Point and Harley Davidson go up and down completely randomly.
Pair Corralation between Check Point and Harley Davidson
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.69 times more return on investment than Harley Davidson. However, Check Point Software is 1.46 times less risky than Harley Davidson. It trades about 0.07 of its potential returns per unit of risk. Harley Davidson is currently generating about -0.02 per unit of risk. If you would invest 14,955 in Check Point Software on November 1, 2024 and sell it today you would earn a total of 4,505 from holding Check Point Software or generate 30.12% 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. Harley Davidson
Performance |
| Timeline |
| Check Point Software |
| Harley Davidson |
Check Point and Harley Davidson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Harley Davidson
The main advantage of trading using opposite Check Point and Harley Davidson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Harley Davidson 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 Harley Davidson will offset losses from the drop in Harley Davidson's long position.| Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc |
| Harley Davidson vs. Fox Factory Holding | Harley Davidson vs. Thor Industries | Harley Davidson vs. LCI Industries | Harley Davidson vs. Patrick Industries |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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