Correlation Between CyberArk Software and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both CyberArk Software and NexGen Energy 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 NexGen Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CyberArk Software and NexGen Energy, you can compare the effects of market volatilities on CyberArk Software and NexGen Energy 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 NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CyberArk Software and NexGen Energy.
Diversification Opportunities for CyberArk Software and NexGen Energy
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CyberArk and NexGen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy 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 NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of CyberArk Software i.e., CyberArk Software and NexGen Energy go up and down completely randomly.
Pair Corralation between CyberArk Software and NexGen Energy
Assuming the 90 days trading horizon CyberArk Software is expected to generate 1.93 times less return on investment than NexGen Energy. But when comparing it to its historical volatility, CyberArk Software is 1.6 times less risky than NexGen Energy. It trades about 0.09 of its potential returns per unit of risk. NexGen Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 640.00 in NexGen Energy on September 13, 2024 and sell it today you would earn a total of 110.00 from holding NexGen Energy or generate 17.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CyberArk Software vs. NexGen Energy
Performance |
| Timeline |
| CyberArk Software |
| NexGen Energy |
CyberArk Software and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CyberArk Software and NexGen Energy
The main advantage of trading using opposite CyberArk Software and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CyberArk Software position performs unexpectedly, NexGen Energy 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 NexGen Energy will offset losses from the drop in NexGen Energy's long position.| CyberArk Software vs. Apple Inc | CyberArk Software vs. Apple Inc | CyberArk Software vs. Apple Inc | CyberArk Software vs. Apple Inc |
| NexGen Energy vs. Food Life Companies | NexGen Energy vs. Austevoll Seafood ASA | NexGen Energy vs. Cogent Communications Holdings | NexGen Energy vs. Shenandoah Telecommunications |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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