Correlation Between LPL Financial and Check Point
Can any of the company-specific risk be diversified away by investing in both LPL Financial 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 LPL Financial and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPL Financial Holdings and Check Point Software, you can compare the effects of market volatilities on LPL Financial 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 LPL Financial with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPL Financial and Check Point.
Diversification Opportunities for LPL Financial and Check Point
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LPL and Check is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding LPL Financial Holdings 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 LPL Financial 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 LPL Financial Holdings 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 LPL Financial i.e., LPL Financial and Check Point go up and down completely randomly.
Pair Corralation between LPL Financial and Check Point
Assuming the 90 days trading horizon LPL Financial Holdings is expected to generate 1.8 times more return on investment than Check Point. However, LPL Financial is 1.8 times more volatile than Check Point Software. It trades about 0.14 of its potential returns per unit of risk. Check Point Software is currently generating about 0.1 per unit of risk. If you would invest 10,945 in LPL Financial Holdings on October 11, 2024 and sell it today you would earn a total of 375.00 from holding LPL Financial Holdings or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPL Financial Holdings vs. Check Point Software
Performance |
| Timeline |
| LPL Financial Holdings |
| Check Point Software |
LPL Financial and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPL Financial and Check Point
The main advantage of trading using opposite LPL Financial and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPL Financial 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.| LPL Financial vs. STAG Industrial, | LPL Financial vs. Nordon Indstrias Metalrgicas | LPL Financial vs. Datadog, | LPL Financial vs. Broadridge Financial Solutions, |
| Check Point vs. Eastman Chemical | Check Point vs. Truist Financial | Check Point vs. LPL Financial Holdings | Check Point vs. Sumitomo Mitsui Financial |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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