Correlation Between CyberArk Software and ON THE

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

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

Diversification Opportunities for CyberArk Software and ON THE

0.86

Correlation Coefficient

CyberArk Software  ON THE

Very poor diversification

The 3 months correlation between CyberArk and 9BP is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and ON THE BEACH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON THE BEACH and CyberArk Software 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 CyberArk Software are associated (or correlated) with ON THE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON THE BEACH has no effect on the direction of CyberArk Software i.e., CyberArk Software and ON THE go up and down completely randomly.

Pair Corralation between CyberArk Software and ON THE

Assuming the 90 days trading horizon CyberArk Software is expected to generate 1.13 times more return on investment than ON THE. However, CyberArk Software is 1.13 times more volatile than ON THE BEACH. It trades about 0.11 of its potential returns per unit of risk. ON THE BEACH is currently generating about 0.09 per unit of risk. If you would invest  25,700  in CyberArk Software on September 1, 2024 and sell it today you would earn a total of  4,330  from holding CyberArk Software or generate 16.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.48%
Values	Daily Returns

CyberArk Software  vs.  ON THE BEACH

CyberArk Software

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CyberArk Software are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CyberArk Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

ON THE BEACH

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ON THE BEACH are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ON THE may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with CyberArk Software and ON THE

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

The idea behind CyberArk Software and ON THE BEACH 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.