Correlation Between CyberArk Software and AuthID

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

By analyzing existing cross correlation between CyberArk Software and authID Inc, you can compare the effects of market volatilities on CyberArk Software and AuthID 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 AuthID. Check out your portfolio center. Please also check ongoing floating volatility patterns of CyberArk Software and AuthID.

Diversification Opportunities for CyberArk Software and AuthID

-0.59

Correlation Coefficient

CyberArk Software  AuthID

Excellent diversification

The 3 months correlation between CyberArk and AuthID is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and authID Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on authID Inc 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 AuthID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of authID Inc has no effect on the direction of CyberArk Software i.e., CyberArk Software and AuthID go up and down completely randomly.

Pair Corralation between CyberArk Software and AuthID

Given the investment horizon of 90 days CyberArk Software is expected to generate 0.37 times more return on investment than AuthID. However, CyberArk Software is 2.67 times less risky than AuthID. It trades about 0.13 of its potential returns per unit of risk. authID Inc is currently generating about -0.07 per unit of risk. If you would invest  27,694  in CyberArk Software on September 4, 2024 and sell it today you would earn a total of  4,217  from holding CyberArk Software or generate 15.23% return on investment over 90 days.

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

CyberArk Software  vs.  authID Inc

CyberArk Software

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CyberArk Software are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental drivers, CyberArk Software reported solid returns over the last few months and may actually be approaching a breakup point.

authID Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days authID Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CyberArk Software and AuthID

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

The idea behind CyberArk Software and authID Inc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.