Correlation Between CyberArk Software and Godaddy

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

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

Diversification Opportunities for CyberArk Software and Godaddy

0.88

Correlation Coefficient

CyberArk Software  Godaddy

Very poor diversification

The 3 months correlation between CyberArk and Godaddy is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and Godaddy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Godaddy 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 Godaddy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Godaddy has no effect on the direction of CyberArk Software i.e., CyberArk Software and Godaddy go up and down completely randomly.

Pair Corralation between CyberArk Software and Godaddy

Given the investment horizon of 90 days CyberArk Software is expected to generate 1.43 times less return on investment than Godaddy. In addition to that, CyberArk Software is 1.25 times more volatile than Godaddy. It trades about 0.13 of its total potential returns per unit of risk. Godaddy is currently generating about 0.23 per unit of volatility. If you would invest  15,950  in Godaddy on September 1, 2024 and sell it today you would earn a total of  3,807  from holding Godaddy or generate 23.87% return on investment over 90 days.

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

CyberArk Software  vs.  Godaddy

CyberArk Software

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CyberArk Software are ranked lower than 10 (%) 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.

Godaddy

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Godaddy are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Godaddy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CyberArk Software and Godaddy

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

The idea behind CyberArk Software and Godaddy 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.