Correlation Between CVS Health and Check Point
Can any of the company-specific risk be diversified away by investing in both CVS Health and Check Point 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 CVS Health and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Check Point Software, you can compare the effects of market volatilities on CVS Health and Check Point 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 CVS Health with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Check Point.
Diversification Opportunities for CVS Health and Check Point
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CVS and Check is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Check Point Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Point Software and CVS Health 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 CVS Health are associated (or correlated) with Check Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Point Software has no effect on the direction of CVS Health i.e., CVS Health and Check Point go up and down completely randomly.
Pair Corralation between CVS Health and Check Point
Assuming the 90 days trading horizon CVS Health is expected to under-perform the Check Point. In addition to that, CVS Health is 1.84 times more volatile than Check Point Software. It trades about -0.01 of its total potential returns per unit of risk. Check Point Software is currently generating about 0.09 per unit of volatility. If you would invest 33,220 in Check Point Software on November 2, 2024 and sell it today you would earn a total of 26,432 from holding Check Point Software or generate 79.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.53% |
| Values | Daily Returns |
CVS Health vs. Check Point Software
Performance |
| Timeline |
| CVS Health |
| Check Point Software |
CVS Health and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Check Point
The main advantage of trading using opposite CVS Health and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Check Point 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 Check Point will offset losses from the drop in Check Point's long position.| CVS Health vs. LPL Financial Holdings | CVS Health vs. Verizon Communications | CVS Health vs. Tyson Foods | CVS Health vs. salesforce inc |
| Check Point vs. Taiwan Semiconductor Manufacturing | Check Point vs. Apple Inc | Check Point vs. Alibaba Group Holding | Check Point vs. Microsoft |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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