Correlation Between Check Point and Radware

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

Diversification Opportunities for Check Point and Radware

0.04

Correlation Coefficient

Check Point  Radware

Significant diversification

The 3 months correlation between Check and Radware is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Radware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radware 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 Radware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radware has no effect on the direction of Check Point i.e., Check Point and Radware go up and down completely randomly.

Pair Corralation between Check Point and Radware

Given the investment horizon of 90 days Check Point Software is expected to under-perform the Radware. In addition to that, Check Point is 1.07 times more volatile than Radware. It trades about -0.02 of its total potential returns per unit of risk. Radware is currently generating about 0.1 per unit of volatility. If you would invest  2,120  in Radware on September 2, 2024 and sell it today you would earn a total of  256.00  from holding Radware or generate 12.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Check Point Software  vs.  Radware

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. Even with relatively invariable forward-looking signals, Check Point is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Radware

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Radware are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Radware may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Check Point and Radware

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

The idea behind Check Point Software and Radware 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.