Correlation Between CyberArk Software and NetScout Systems
Can any of the company-specific risk be diversified away by investing in both CyberArk Software and NetScout Systems 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 NetScout Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CyberArk Software and NetScout Systems, you can compare the effects of market volatilities on CyberArk Software and NetScout Systems 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 NetScout Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of CyberArk Software and NetScout Systems.
Diversification Opportunities for CyberArk Software and NetScout Systems
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CyberArk and NetScout is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and NetScout Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetScout Systems 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 NetScout Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetScout Systems has no effect on the direction of CyberArk Software i.e., CyberArk Software and NetScout Systems go up and down completely randomly.
Pair Corralation between CyberArk Software and NetScout Systems
Given the investment horizon of 90 days CyberArk Software is expected to generate 1.22 times more return on investment than NetScout Systems. However, CyberArk Software is 1.22 times more volatile than NetScout Systems. It trades about 0.1 of its potential returns per unit of risk. NetScout Systems is currently generating about 0.09 per unit of risk. If you would invest 30,574 in CyberArk Software on September 18, 2024 and sell it today you would earn a total of 1,208 from holding CyberArk Software or generate 3.95% 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. NetScout Systems
Performance |
| Timeline |
| CyberArk Software |
| NetScout Systems |
CyberArk Software and NetScout Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CyberArk Software and NetScout Systems
The main advantage of trading using opposite CyberArk Software and NetScout Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CyberArk Software position performs unexpectedly, NetScout Systems 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 NetScout Systems will offset losses from the drop in NetScout Systems' long position.| CyberArk Software vs. F5 Networks | CyberArk Software vs. Qualys Inc | CyberArk Software vs. VeriSign | CyberArk Software vs. Amdocs |
| NetScout Systems vs. Passage Bio | NetScout Systems vs. Black Diamond Therapeutics | NetScout Systems vs. Alector | NetScout Systems vs. Century Therapeutics |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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