Correlation Between Check Point and Hornbach Holding
Can any of the company-specific risk be diversified away by investing in both Check Point and Hornbach Holding 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 Hornbach Holding 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 Hornbach Holding VZO, you can compare the effects of market volatilities on Check Point and Hornbach Holding 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 Hornbach Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Hornbach Holding.
Diversification Opportunities for Check Point and Hornbach Holding
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Check and Hornbach is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Hornbach Holding VZO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hornbach Holding VZO 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 Hornbach Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hornbach Holding VZO has no effect on the direction of Check Point i.e., Check Point and Hornbach Holding go up and down completely randomly.
Pair Corralation between Check Point and Hornbach Holding
Assuming the 90 days trading horizon Check Point Software is expected to generate 1.1 times more return on investment than Hornbach Holding. However, Check Point is 1.1 times more volatile than Hornbach Holding VZO. It trades about 0.24 of its potential returns per unit of risk. Hornbach Holding VZO is currently generating about 0.23 per unit of risk. If you would invest 16,525 in Check Point Software on September 12, 2024 and sell it today you would earn a total of 1,190 from holding Check Point Software or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Check Point Software vs. Hornbach Holding VZO
Performance |
| Timeline |
| Check Point Software |
| Hornbach Holding VZO |
Check Point and Hornbach Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Hornbach Holding
The main advantage of trading using opposite Check Point and Hornbach Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Hornbach Holding 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 Hornbach Holding will offset losses from the drop in Hornbach Holding's long position.| Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc |
| Hornbach Holding vs. TOTAL BANGUN PERSAD | Hornbach Holding vs. HEXINDO ADIPERKASA | Hornbach Holding vs. INDIKA ENERGY | Hornbach Holding vs. INDIKA ENERGY |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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