Correlation Between CyberArk Software and National Bank
Can any of the company-specific risk be diversified away by investing in both CyberArk Software and National Bank 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 National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CyberArk Software and National Bank Holdings, you can compare the effects of market volatilities on CyberArk Software and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CyberArk Software and National Bank.
Diversification Opportunities for CyberArk Software and National Bank
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CyberArk and National is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of CyberArk Software i.e., CyberArk Software and National Bank go up and down completely randomly.
Pair Corralation between CyberArk Software and National Bank
Assuming the 90 days trading horizon CyberArk Software is expected to generate 2.68 times more return on investment than National Bank. However, CyberArk Software is 2.68 times more volatile than National Bank Holdings. It trades about 0.07 of its potential returns per unit of risk. National Bank Holdings is currently generating about -0.2 per unit of risk. If you would invest 28,170 in CyberArk Software on September 13, 2024 and sell it today you would earn a total of 1,180 from holding CyberArk Software or generate 4.19% 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. National Bank Holdings
Performance |
| Timeline |
| CyberArk Software |
| National Bank Holdings |
CyberArk Software and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CyberArk Software and National Bank
The main advantage of trading using opposite CyberArk Software and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CyberArk Software position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| CyberArk Software vs. Apple Inc | CyberArk Software vs. Apple Inc | CyberArk Software vs. Apple Inc | CyberArk Software vs. Apple Inc |
| National Bank vs. Fifth Third Bancorp | National Bank vs. Regions Financial | National Bank vs. Superior Plus Corp | National Bank vs. SIVERS SEMICONDUCTORS AB |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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