Correlation Between Evertec and CyberArk Software
Can any of the company-specific risk be diversified away by investing in both Evertec and CyberArk Software 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 Evertec and CyberArk Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evertec and CyberArk Software, you can compare the effects of market volatilities on Evertec and CyberArk Software 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 Evertec with a short position of CyberArk Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evertec and CyberArk Software.
Diversification Opportunities for Evertec and CyberArk Software
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Evertec and CyberArk is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and CyberArk Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberArk Software and Evertec 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 Evertec are associated (or correlated) with CyberArk Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberArk Software has no effect on the direction of Evertec i.e., Evertec and CyberArk Software go up and down completely randomly.
Pair Corralation between Evertec and CyberArk Software
Given the investment horizon of 90 days Evertec is expected to generate 1.61 times less return on investment than CyberArk Software. But when comparing it to its historical volatility, Evertec is 1.14 times less risky than CyberArk Software. It trades about 0.08 of its potential returns per unit of risk. CyberArk Software is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 28,050 in CyberArk Software on August 26, 2024 and sell it today you would earn a total of 3,923 from holding CyberArk Software or generate 13.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evertec vs. CyberArk Software
Performance |
| Timeline |
| Evertec |
| CyberArk Software |
Evertec and CyberArk Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evertec and CyberArk Software
The main advantage of trading using opposite Evertec and CyberArk Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evertec position performs unexpectedly, CyberArk Software 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 CyberArk Software will offset losses from the drop in CyberArk Software's long position.The idea behind Evertec and CyberArk Software pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CyberArk Software vs. GigaCloud Technology Class | CyberArk Software vs. Arqit Quantum | CyberArk Software vs. Cemtrex | CyberArk Software vs. Rapid7 Inc |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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