Correlation Between Check Point and Amgen

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

Diversification Opportunities for Check Point and Amgen

-0.01

Correlation Coefficient

Check Point  Amgen

Good diversification

The 3 months correlation between Check and Amgen is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc 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 Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of Check Point i.e., Check Point and Amgen go up and down completely randomly.

Pair Corralation between Check Point and Amgen

Assuming the 90 days trading horizon Check Point Software is expected to generate 0.43 times more return on investment than Amgen. However, Check Point Software is 2.35 times less risky than Amgen. It trades about 0.33 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.04 per unit of risk. If you would invest  16,445  in Check Point Software on September 18, 2024 and sell it today you would earn a total of  1,570  from holding Check Point Software or generate 9.55% return on investment over 90 days.

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

Check Point Software  vs.  Amgen Inc

Check Point Software

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Check Point may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Amgen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amgen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Check Point and Amgen

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

The idea behind Check Point Software and Amgen Inc 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.