Correlation Between Ulta Beauty and CyberArk Software

Can any of the company-specific risk be diversified away by investing in both Ulta Beauty 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 Ulta Beauty and CyberArk Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ulta Beauty and CyberArk Software, you can compare the effects of market volatilities on Ulta Beauty 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 Ulta Beauty with a short position of CyberArk Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and CyberArk Software.

Diversification Opportunities for Ulta Beauty and CyberArk Software

0.0

Correlation Coefficient

Ulta Beauty  CyberArk Software

Pay attention - limited upside

The 3 months correlation between Ulta and CyberArk is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and CyberArk Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberArk Software and Ulta Beauty 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 Ulta Beauty 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 Ulta Beauty i.e., Ulta Beauty and CyberArk Software go up and down completely randomly.

Pair Corralation between Ulta Beauty and CyberArk Software

If you would invest  27,180  in CyberArk Software on October 7, 2024 and sell it today you would earn a total of  5,550  from holding CyberArk Software or generate 20.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.56%
Values	Daily Returns

Ulta Beauty  vs.  CyberArk Software

Ulta Beauty

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Ulta Beauty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ulta Beauty is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CyberArk Software

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CyberArk Software are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, CyberArk Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ulta Beauty and CyberArk Software

The main advantage of trading using opposite Ulta Beauty and CyberArk Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty 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 Ulta Beauty 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.

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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.