Correlation Between Check Point and SLR Investment
Can any of the company-specific risk be diversified away by investing in both Check Point and SLR Investment 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 SLR Investment 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 SLR Investment Corp, you can compare the effects of market volatilities on Check Point and SLR Investment 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 SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and SLR Investment.
Diversification Opportunities for Check Point and SLR Investment
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Check and SLR is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Check Point i.e., Check Point and SLR Investment go up and down completely randomly.
Pair Corralation between Check Point and SLR Investment
Assuming the 90 days trading horizon Check Point Software is expected to generate 1.6 times more return on investment than SLR Investment. However, Check Point is 1.6 times more volatile than SLR Investment Corp. It trades about 0.08 of its potential returns per unit of risk. SLR Investment Corp is currently generating about 0.11 per unit of risk. If you would invest 15,170 in Check Point Software on November 8, 2024 and sell it today you would earn a total of 5,030 from holding Check Point Software or generate 33.16% 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. SLR Investment Corp
Performance |
| Timeline |
| Check Point Software |
| SLR Investment Corp |
Check Point and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and SLR Investment
The main advantage of trading using opposite Check Point and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's long position.| Check Point vs. Meli Hotels International | Check Point vs. Regal Hotels International | Check Point vs. INTER CARS SA | Check Point vs. The Boston Beer |
| SLR Investment vs. HELIOS TECHS INC | SLR Investment vs. THAI BEVERAGE | SLR Investment vs. Cogent Communications Holdings | SLR Investment vs. Axcelis Technologies |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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