Correlation Between Check Point and FC Investment

Can any of the company-specific risk be diversified away by investing in both Check Point and FC Investment 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 FC Investment 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 FC Investment Trust, you can compare the effects of market volatilities on Check Point and FC Investment 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 FC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and FC Investment.

Diversification Opportunities for Check Point and FC Investment

-0.44

Correlation Coefficient

Check Point  FC Investment

Very good diversification

The 3 months correlation between Check and FCIT is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and FC Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FC Investment Trust 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 FC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FC Investment Trust has no effect on the direction of Check Point i.e., Check Point and FC Investment go up and down completely randomly.

Pair Corralation between Check Point and FC Investment

Assuming the 90 days trading horizon Check Point Software is expected to generate 1.97 times more return on investment than FC Investment. However, Check Point is 1.97 times more volatile than FC Investment Trust. It trades about 0.07 of its potential returns per unit of risk. FC Investment Trust is currently generating about 0.09 per unit of risk. If you would invest  14,989  in Check Point Software on September 13, 2024 and sell it today you would earn a total of  3,795  from holding Check Point Software or generate 25.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.8%
Values	Daily Returns

Check Point Software  vs.  FC Investment Trust

Check Point Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Check Point Software has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

FC Investment Trust

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FC Investment Trust are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, FC Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Check Point and FC Investment

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

The idea behind Check Point Software and FC Investment Trust 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.