Correlation Between Check Point and HomeToGo
Can any of the company-specific risk be diversified away by investing in both Check Point and HomeToGo 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 HomeToGo 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 HomeToGo SE, you can compare the effects of market volatilities on Check Point and HomeToGo 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 HomeToGo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and HomeToGo.
Diversification Opportunities for Check Point and HomeToGo
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Check and HomeToGo is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and HomeToGo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeToGo SE 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 HomeToGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeToGo SE has no effect on the direction of Check Point i.e., Check Point and HomeToGo go up and down completely randomly.
Pair Corralation between Check Point and HomeToGo
Assuming the 90 days trading horizon Check Point is expected to generate 22.3 times less return on investment than HomeToGo. But when comparing it to its historical volatility, Check Point Software is 1.22 times less risky than HomeToGo. It trades about 0.01 of its potential returns per unit of risk. HomeToGo SE is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 181.00 in HomeToGo SE on September 2, 2024 and sell it today you would earn a total of 34.00 from holding HomeToGo SE or generate 18.78% 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. HomeToGo SE
Performance |
| Timeline |
| Check Point Software |
| HomeToGo SE |
Check Point and HomeToGo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and HomeToGo
The main advantage of trading using opposite Check Point and HomeToGo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, HomeToGo 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 HomeToGo will offset losses from the drop in HomeToGo's long position.| Check Point vs. URBAN OUTFITTERS | Check Point vs. SLR Investment Corp | Check Point vs. ECHO INVESTMENT ZY | Check Point vs. PennyMac Mortgage Investment |
| HomeToGo vs. LG Display Co | HomeToGo vs. ANGLER GAMING PLC | HomeToGo vs. QINGCI GAMES INC | HomeToGo vs. GameStop Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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