Correlation Between Check Point and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Check Point and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on Check Point and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and SMA Solar.
Diversification Opportunities for Check Point and SMA Solar
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Check and SMA is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Check Point i.e., Check Point and SMA Solar go up and down completely randomly.
Pair Corralation between Check Point and SMA Solar
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.66 times more return on investment than SMA Solar. However, Check Point Software is 1.51 times less risky than SMA Solar. It trades about -0.12 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.19 per unit of risk. If you would invest 19,225 in Check Point Software on August 28, 2024 and sell it today you would lose (1,875) from holding Check Point Software or give up 9.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. SMA Solar Technology
Performance |
| Timeline |
| Check Point Software |
| SMA Solar Technology |
Check Point and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and SMA Solar
The main advantage of trading using opposite Check Point and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Check Point vs. YOOMA WELLNESS INC | Check Point vs. Natural Health Trends | Check Point vs. Diamondrock Hospitality Co | Check Point vs. NORWEGIAN AIR SHUT |
| SMA Solar vs. Superior Plus Corp | SMA Solar vs. Origin Agritech | SMA Solar vs. Identiv | SMA Solar vs. INTUITIVE SURGICAL |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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