Correlation Between International Consolidated and Check Point

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

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

Diversification Opportunities for International Consolidated and Check Point

0.0

Correlation Coefficient

International Consolidated  Check Point

Pay attention - limited upside

The 3 months correlation between International and Check is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air 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 International Consolidated 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 International Consolidated Airlines 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 International Consolidated i.e., International Consolidated and Check Point go up and down completely randomly.

Pair Corralation between International Consolidated and Check Point

Assuming the 90 days horizon International Consolidated Airlines is expected to generate 1.03 times more return on investment than Check Point. However, International Consolidated is 1.03 times more volatile than Check Point Software. It trades about 0.28 of its potential returns per unit of risk. Check Point Software is currently generating about 0.04 per unit of risk. If you would invest  253.00  in International Consolidated Airlines on September 27, 2024 and sell it today you would earn a total of  117.00  from holding International Consolidated Airlines or generate 46.25% return on investment over 90 days.

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

International Consolidated Air  vs.  Check Point Software

International Consolidated

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, International Consolidated reported solid returns over the last few months and may actually be approaching a breakup point.

Check Point Software

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Check Point is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with International Consolidated and Check Point

The main advantage of trading using opposite International Consolidated and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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.

The idea behind International Consolidated Airlines and Check Point Software 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.