Correlation Between Check Point and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Check Point and STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS, you can compare the effects of market volatilities on Check Point and STMICROELECTRONICS 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 STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and STMICROELECTRONICS.
Diversification Opportunities for Check Point and STMICROELECTRONICS
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Check and STMICROELECTRONICS is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS 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 STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of Check Point i.e., Check Point and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between Check Point and STMICROELECTRONICS
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.61 times more return on investment than STMICROELECTRONICS. However, Check Point Software is 1.65 times less risky than STMICROELECTRONICS. It trades about 0.17 of its potential returns per unit of risk. STMICROELECTRONICS is currently generating about 0.0 per unit of risk. If you would invest 17,350 in Check Point Software on September 24, 2024 and sell it today you would earn a total of 745.00 from holding Check Point Software or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. STMICROELECTRONICS
Performance |
| Timeline |
| Check Point Software |
| STMICROELECTRONICS |
Check Point and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and STMICROELECTRONICS
The main advantage of trading using opposite Check Point and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.| Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc |
| STMICROELECTRONICS vs. 24SEVENOFFICE GROUP AB | STMICROELECTRONICS vs. Check Point Software | STMICROELECTRONICS vs. Casio Computer CoLtd | STMICROELECTRONICS vs. AECOM TECHNOLOGY |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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