Correlation Between CyberArk Software and Automatic Data
Can any of the company-specific risk be diversified away by investing in both CyberArk Software and Automatic Data 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 Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CyberArk Software and Automatic Data Processing, you can compare the effects of market volatilities on CyberArk Software and Automatic Data 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 Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of CyberArk Software and Automatic Data.
Diversification Opportunities for CyberArk Software and Automatic Data
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CyberArk and Automatic is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of CyberArk Software i.e., CyberArk Software and Automatic Data go up and down completely randomly.
Pair Corralation between CyberArk Software and Automatic Data
Assuming the 90 days trading horizon CyberArk Software is expected to generate 1.85 times more return on investment than Automatic Data. However, CyberArk Software is 1.85 times more volatile than Automatic Data Processing. It trades about 0.26 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.01 per unit of risk. If you would invest 30,550 in CyberArk Software on October 30, 2024 and sell it today you would earn a total of 3,410 from holding CyberArk Software or generate 11.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CyberArk Software vs. Automatic Data Processing
Performance |
| Timeline |
| CyberArk Software |
| Automatic Data Processing |
CyberArk Software and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CyberArk Software and Automatic Data
The main advantage of trading using opposite CyberArk Software and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CyberArk Software position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| CyberArk Software vs. Apple Inc | CyberArk Software vs. Apple Inc | CyberArk Software vs. Apple Inc | CyberArk Software vs. Apple Inc |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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