Correlation Between Check Point and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both Check Point and Sterling Construction 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 Sterling Construction 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 Sterling Construction, you can compare the effects of market volatilities on Check Point and Sterling Construction 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 Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Sterling Construction.
Diversification Opportunities for Check Point and Sterling Construction
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Check and Sterling is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction 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 Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of Check Point i.e., Check Point and Sterling Construction go up and down completely randomly.
Pair Corralation between Check Point and Sterling Construction
Assuming the 90 days trading horizon Check Point is expected to generate 2.25 times less return on investment than Sterling Construction. But when comparing it to its historical volatility, Check Point Software is 2.22 times less risky than Sterling Construction. It trades about 0.08 of its potential returns per unit of risk. Sterling Construction is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,560 in Sterling Construction on December 4, 2024 and sell it today you would earn a total of 7,905 from holding Sterling Construction or generate 222.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. Sterling Construction
Performance |
| Timeline |
| Check Point Software |
| Sterling Construction |
Check Point and Sterling Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Sterling Construction
The main advantage of trading using opposite Check Point and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Sterling Construction 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 Sterling Construction will offset losses from the drop in Sterling Construction's long position.| Check Point vs. Sterling Construction | Check Point vs. SmarTone Telecommunications Holdings | Check Point vs. TITAN MACHINERY | Check Point vs. Cellnex Telecom SA |
| Sterling Construction vs. NTT DATA | Sterling Construction vs. SALESFORCE INC CDR | Sterling Construction vs. SIDETRADE EO 1 | Sterling Construction vs. Tradegate AG Wertpapierhandelsbank |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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