Correlation Between Apple and CyberArk Software

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

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

Diversification Opportunities for Apple and CyberArk Software

-0.01

Correlation Coefficient

Apple  CyberArk Software

Good diversification

The 3 months correlation between Apple and CyberArk is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and CyberArk Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberArk Software and Apple 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 Apple Inc 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 Apple i.e., Apple and CyberArk Software go up and down completely randomly.

Pair Corralation between Apple and CyberArk Software

Assuming the 90 days trading horizon Apple is expected to generate 3.66 times less return on investment than CyberArk Software. But when comparing it to its historical volatility, Apple Inc is 1.49 times less risky than CyberArk Software. It trades about 0.09 of its potential returns per unit of risk. CyberArk Software is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  29,990  in CyberArk Software on November 20, 2024 and sell it today you would earn a total of  9,470  from holding CyberArk Software or generate 31.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  CyberArk Software

Apple Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in March 2025.

CyberArk Software

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CyberArk Software are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CyberArk Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and CyberArk Software

The main advantage of trading using opposite Apple and CyberArk Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.