Correlation Between Check Point and Toromont Industries

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

Diversification Opportunities for Check Point and Toromont Industries

-0.06

Correlation Coefficient

Check Point  Toromont Industries

Good diversification

The 3 months correlation between Check and Toromont is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Toromont Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toromont Industries 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 Toromont Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toromont Industries has no effect on the direction of Check Point i.e., Check Point and Toromont Industries go up and down completely randomly.

Pair Corralation between Check Point and Toromont Industries

Assuming the 90 days trading horizon Check Point is expected to generate 2.06 times less return on investment than Toromont Industries. In addition to that, Check Point is 1.28 times more volatile than Toromont Industries. It trades about 0.06 of its total potential returns per unit of risk. Toromont Industries is currently generating about 0.16 per unit of volatility. If you would invest  7,119  in Toromont Industries on April 23, 2025 and sell it today you would earn a total of  881.00  from holding Toromont Industries or generate 12.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Check Point Software  vs.  Toromont Industries

Check Point Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Check Point Software are ranked lower than 4 (%) 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.

Toromont Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Toromont Industries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Toromont Industries may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Check Point and Toromont Industries

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

The idea behind Check Point Software and Toromont Industries 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.