Correlation Between CyberArk Software and COMPASS GROUP
Can any of the company-specific risk be diversified away by investing in both CyberArk Software and COMPASS GROUP 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 COMPASS GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CyberArk Software and COMPASS GROUP, you can compare the effects of market volatilities on CyberArk Software and COMPASS GROUP 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 COMPASS GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of CyberArk Software and COMPASS GROUP.
Diversification Opportunities for CyberArk Software and COMPASS GROUP
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CyberArk and COMPASS is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and COMPASS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMPASS GROUP 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 COMPASS GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMPASS GROUP has no effect on the direction of CyberArk Software i.e., CyberArk Software and COMPASS GROUP go up and down completely randomly.
Pair Corralation between CyberArk Software and COMPASS GROUP
Assuming the 90 days trading horizon CyberArk Software is expected to generate 1.82 times more return on investment than COMPASS GROUP. However, CyberArk Software is 1.82 times more volatile than COMPASS GROUP. It trades about 0.1 of its potential returns per unit of risk. COMPASS GROUP is currently generating about 0.06 per unit of risk. If you would invest 13,940 in CyberArk Software on September 4, 2024 and sell it today you would earn a total of 16,090 from holding CyberArk Software or generate 115.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
CyberArk Software vs. COMPASS GROUP
Performance |
| Timeline |
| CyberArk Software |
| COMPASS GROUP |
CyberArk Software and COMPASS GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CyberArk Software and COMPASS GROUP
The main advantage of trading using opposite CyberArk Software and COMPASS GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CyberArk Software position performs unexpectedly, COMPASS GROUP 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 COMPASS GROUP will offset losses from the drop in COMPASS GROUP's long position.| CyberArk Software vs. Apple Inc | CyberArk Software vs. Apple Inc | CyberArk Software vs. Apple Inc | CyberArk Software vs. Apple Inc |
| COMPASS GROUP vs. TOREX SEMICONDUCTOR LTD | COMPASS GROUP vs. Nordic Semiconductor ASA | COMPASS GROUP vs. Wayside Technology Group | COMPASS GROUP vs. Ribbon Communications |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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