Correlation Between Check Point and X Fab
Can any of the company-specific risk be diversified away by investing in both Check Point and X Fab 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 X Fab 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 X Fab Silicon, you can compare the effects of market volatilities on Check Point and X Fab 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 X Fab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and X Fab.
Diversification Opportunities for Check Point and X Fab
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Check and XFB is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon 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 X Fab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Fab Silicon has no effect on the direction of Check Point i.e., Check Point and X Fab go up and down completely randomly.
Pair Corralation between Check Point and X Fab
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.76 times more return on investment than X Fab. However, Check Point Software is 1.31 times less risky than X Fab. It trades about 0.08 of its potential returns per unit of risk. X Fab Silicon is currently generating about -0.1 per unit of risk. If you would invest 14,050 in Check Point Software on September 3, 2024 and sell it today you would earn a total of 3,175 from holding Check Point Software or generate 22.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Check Point Software vs. X Fab Silicon
Performance |
| Timeline |
| Check Point Software |
| X Fab Silicon |
Check Point and X Fab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and X Fab
The main advantage of trading using opposite Check Point and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, X Fab 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 X Fab will offset losses from the drop in X Fab's long position.| Check Point vs. Alfa Financial Software | Check Point vs. ASURE SOFTWARE | Check Point vs. CPU SOFTWAREHOUSE | Check Point vs. USU Software AG |
| X Fab vs. Singapore Airlines Limited | X Fab vs. FANDIFI TECHNOLOGY P | X Fab vs. Microchip Technology Incorporated | X Fab 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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