Correlation Between Check Point and Jacquet Metal

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Can any of the company-specific risk be diversified away by investing in both Check Point and Jacquet Metal 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 Jacquet Metal 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 Jacquet Metal Service, you can compare the effects of market volatilities on Check Point and Jacquet Metal 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 Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Jacquet Metal.

Diversification Opportunities for Check Point and Jacquet Metal

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Check and Jacquet is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Check Point i.e., Check Point and Jacquet Metal go up and down completely randomly.

Pair Corralation between Check Point and Jacquet Metal

Assuming the 90 days trading horizon Check Point Software is expected to under-perform the Jacquet Metal. In addition to that, Check Point is 2.37 times more volatile than Jacquet Metal Service. It trades about -0.14 of its total potential returns per unit of risk. Jacquet Metal Service is currently generating about -0.18 per unit of volatility. If you would invest  1,642  in Jacquet Metal Service on August 29, 2024 and sell it today you would lose (94.00) from holding Jacquet Metal Service or give up 5.72% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Check Point Software  vs.  Jacquet Metal Service

 Performance 
       Timeline  
Check Point Software 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Check Point Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Check Point is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
Jacquet Metal Service 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Jacquet Metal Service are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Jacquet Metal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Check Point and Jacquet Metal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Check Point and Jacquet Metal

The main advantage of trading using opposite Check Point and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.
The idea behind Check Point Software and Jacquet Metal Service pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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