Correlation Between SMA Solar and Check Point
Can any of the company-specific risk be diversified away by investing in both SMA Solar 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 SMA Solar and Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Check Point Software, you can compare the effects of market volatilities on SMA Solar 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 SMA Solar with a short position of Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Check Point.
Diversification Opportunities for SMA Solar and Check Point
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SMA and Check is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology 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 SMA Solar 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and Check Point go up and down completely randomly.
Pair Corralation between SMA Solar and Check Point
Assuming the 90 days horizon SMA Solar Technology is expected to generate 4.82 times more return on investment than Check Point. However, SMA Solar is 4.82 times more volatile than Check Point Software. It trades about 0.22 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 1,509 in SMA Solar Technology on December 23, 2024 and sell it today you would earn a total of 595.00 from holding SMA Solar Technology or generate 39.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Check Point Software
Performance |
| Timeline |
| SMA Solar Technology |
| Check Point Software |
SMA Solar and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Check Point
The main advantage of trading using opposite SMA Solar and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar 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.| SMA Solar vs. Tyson Foods | SMA Solar vs. China Foods Limited | SMA Solar vs. GOLDQUEST MINING | SMA Solar vs. Collins Foods Limited |
| Check Point vs. National Storage Affiliates | Check Point vs. CN DATANG C | Check Point vs. Scandinavian Tobacco Group | Check Point vs. IMPERIAL TOBACCO |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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