Correlation Between NetApp and Check Point

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

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

Diversification Opportunities for NetApp and Check Point

-0.21

Correlation Coefficient

NetApp  Check Point

Very good diversification

The 3 months correlation between NetApp and Check is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding NetApp Inc 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 NetApp 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 NetApp Inc 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 NetApp i.e., NetApp and Check Point go up and down completely randomly.

Pair Corralation between NetApp and Check Point

Given the investment horizon of 90 days NetApp Inc is expected to generate 0.63 times more return on investment than Check Point. However, NetApp Inc is 1.59 times less risky than Check Point. It trades about 0.1 of its potential returns per unit of risk. Check Point Software is currently generating about -0.09 per unit of risk. If you would invest  10,004  in NetApp Inc on May 16, 2025 and sell it today you would earn a total of  936.00  from holding NetApp Inc or generate 9.36% return on investment over 90 days.

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

NetApp Inc  vs.  Check Point Software

NetApp Inc

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in NetApp Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, NetApp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Check Point Software

Risk-Adjusted Performance

Weakest

Over the last 90 days Check Point Software has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in September 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with NetApp and Check Point

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

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.