Correlation Between Granite Construction and Check Point
Can any of the company-specific risk be diversified away by investing in both Granite Construction 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 Granite Construction and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and Check Point Software, you can compare the effects of market volatilities on Granite Construction 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 Granite Construction with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Check Point.
Diversification Opportunities for Granite Construction and Check Point
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Granite and Check is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction 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 Granite Construction 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 Granite Construction 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 Granite Construction i.e., Granite Construction and Check Point go up and down completely randomly.
Pair Corralation between Granite Construction and Check Point
Assuming the 90 days trading horizon Granite Construction is expected to under-perform the Check Point. But the stock apears to be less risky and, when comparing its historical volatility, Granite Construction is 1.05 times less risky than Check Point. The stock trades about -0.25 of its potential returns per unit of risk. The Check Point Software is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 18,705 in Check Point Software on November 27, 2024 and sell it today you would earn a total of 1,935 from holding Check Point Software or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Construction vs. Check Point Software
Performance |
| Timeline |
| Granite Construction |
| Check Point Software |
Granite Construction and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Check Point
The main advantage of trading using opposite Granite Construction and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction 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.| Granite Construction vs. AWILCO DRILLING PLC | Granite Construction vs. CANON MARKETING JP | Granite Construction vs. SEI Investments | Granite Construction vs. Platinum Investment Management |
| Check Point vs. COMMERCIAL VEHICLE | Check Point vs. Playtech plc | Check Point vs. Genscript Biotech | Check Point vs. GRUPO CARSO A1 |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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