Correlation Between Check Point and A10 Network
Can any of the company-specific risk be diversified away by investing in both Check Point and A10 Network 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 A10 Network 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 A10 Network, you can compare the effects of market volatilities on Check Point and A10 Network 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 A10 Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and A10 Network.
Diversification Opportunities for Check Point and A10 Network
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Check and A10 is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and A10 Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A10 Network 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 A10 Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A10 Network has no effect on the direction of Check Point i.e., Check Point and A10 Network go up and down completely randomly.
Pair Corralation between Check Point and A10 Network
Given the investment horizon of 90 days Check Point Software is expected to generate 0.54 times more return on investment than A10 Network. However, Check Point Software is 1.85 times less risky than A10 Network. It trades about 0.04 of its potential returns per unit of risk. A10 Network is currently generating about 0.02 per unit of risk. If you would invest 12,061 in Check Point Software on February 8, 2024 and sell it today you would earn a total of 3,468 from holding Check Point Software or generate 28.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
Check Point Software vs. A10 Network
Performance |
Timeline |
Check Point Software |
A10 Network |
Check Point and A10 Network Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Check Point and A10 Network
The main advantage of trading using opposite Check Point and A10 Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, A10 Network 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 A10 Network will offset losses from the drop in A10 Network's long position.The idea behind Check Point Software and A10 Network 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.A10 Network vs. Progress Software | A10 Network vs. CommVault Systems | A10 Network vs. Blackbaud | A10 Network vs. ACI Worldwide |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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