Correlation Between Check Point and Kroger

Can any of the company-specific risk be diversified away by investing in both Check Point and Kroger 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 Check Point and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Check Point Software and Kroger Co, you can compare the effects of market volatilities on Check Point and Kroger 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 Check Point with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Kroger.

Diversification Opportunities for Check Point and Kroger

-0.42

Correlation Coefficient

Check Point  Kroger

Very good diversification

The 3 months correlation between Check and Kroger is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger and Check Point 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 Check Point Software are associated (or correlated) with Kroger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kroger has no effect on the direction of Check Point i.e., Check Point and Kroger go up and down completely randomly.

Pair Corralation between Check Point and Kroger

Assuming the 90 days trading horizon Check Point is expected to generate 5.09 times less return on investment than Kroger. In addition to that, Check Point is 1.54 times more volatile than Kroger Co. It trades about 0.02 of its total potential returns per unit of risk. Kroger Co is currently generating about 0.14 per unit of volatility. If you would invest  5,282  in Kroger Co on September 5, 2024 and sell it today you would earn a total of  691.00  from holding Kroger Co or generate 13.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Check Point Software  vs.  Kroger Co

Check Point Software

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Check Point is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Kroger

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kroger Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kroger may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Check Point and Kroger

The main advantage of trading using opposite Check Point and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Kroger 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 Kroger will offset losses from the drop in Kroger's long position.

The idea behind Check Point Software and Kroger Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.