Correlation Between United Rentals and CyberArk Software
Can any of the company-specific risk be diversified away by investing in both United Rentals 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 United Rentals and CyberArk Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and CyberArk Software, you can compare the effects of market volatilities on United Rentals 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 United Rentals with a short position of CyberArk Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and CyberArk Software.
Diversification Opportunities for United Rentals and CyberArk Software
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and CyberArk is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and CyberArk Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberArk Software and United Rentals 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 United Rentals 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 United Rentals i.e., United Rentals and CyberArk Software go up and down completely randomly.
Pair Corralation between United Rentals and CyberArk Software
Assuming the 90 days horizon United Rentals is expected to generate 1.63 times less return on investment than CyberArk Software. In addition to that, United Rentals is 1.06 times more volatile than CyberArk Software. It trades about 0.16 of its total potential returns per unit of risk. CyberArk Software is currently generating about 0.27 per unit of volatility. If you would invest 25,310 in CyberArk Software on September 5, 2024 and sell it today you would earn a total of 5,370 from holding CyberArk Software or generate 21.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. CyberArk Software
Performance |
| Timeline |
| United Rentals |
| CyberArk Software |
United Rentals and CyberArk Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and CyberArk Software
The main advantage of trading using opposite United Rentals and CyberArk Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals 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.| United Rentals vs. AGRICULTBK HADR25 YC | United Rentals vs. NIPPON STEEL SPADR | United Rentals vs. Federal Agricultural Mortgage | United Rentals vs. Hitachi Construction Machinery |
| CyberArk Software vs. Gamma Communications plc | CyberArk Software vs. SK TELECOM TDADR | CyberArk Software vs. United Rentals | CyberArk Software vs. T MOBILE INCDL 00001 |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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