Correlation Between Performance Food and Check Point
Can any of the company-specific risk be diversified away by investing in both Performance Food 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 Performance Food and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Food Group and Check Point Software, you can compare the effects of market volatilities on Performance Food 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 Performance Food with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Check Point.
Diversification Opportunities for Performance Food and Check Point
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Performance and Check is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group 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 Performance Food 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 Performance Food Group 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 Performance Food i.e., Performance Food and Check Point go up and down completely randomly.
Pair Corralation between Performance Food and Check Point
Assuming the 90 days trading horizon Performance Food Group is expected to generate 1.02 times more return on investment than Check Point. However, Performance Food is 1.02 times more volatile than Check Point Software. It trades about 0.06 of its potential returns per unit of risk. Check Point Software is currently generating about 0.05 per unit of risk. If you would invest 5,700 in Performance Food Group on August 27, 2024 and sell it today you would earn a total of 2,650 from holding Performance Food Group or generate 46.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Check Point Software
Performance |
| Timeline |
| Performance Food |
| Check Point Software |
Performance Food and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Check Point
The main advantage of trading using opposite Performance Food and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food 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.| Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc |
| Check Point vs. Apple Inc | Check Point vs. Apple Inc | Check Point vs. Apple Inc | 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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