Correlation Between Consensus Cloud and CyberArk Software

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

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

Diversification Opportunities for Consensus Cloud and CyberArk Software

0.76

Correlation Coefficient

Consensus Cloud  CyberArk Software

Poor diversification

The 3 months correlation between Consensus and CyberArk is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Consensus Cloud Solutions and CyberArk Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberArk Software and Consensus Cloud 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 Consensus Cloud Solutions 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 Consensus Cloud i.e., Consensus Cloud and CyberArk Software go up and down completely randomly.

Pair Corralation between Consensus Cloud and CyberArk Software

Given the investment horizon of 90 days Consensus Cloud is expected to generate 2.19 times less return on investment than CyberArk Software. In addition to that, Consensus Cloud is 1.31 times more volatile than CyberArk Software. It trades about 0.03 of its total potential returns per unit of risk. CyberArk Software is currently generating about 0.09 per unit of volatility. If you would invest  32,971  in CyberArk Software on December 4, 2024 and sell it today you would earn a total of  3,414  from holding CyberArk Software or generate 10.35% return on investment over 90 days.

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

Consensus Cloud Solutions  vs.  CyberArk Software

Consensus Cloud Solutions

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Consensus Cloud Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Consensus Cloud is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

CyberArk Software

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CyberArk Software are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental drivers, CyberArk Software may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Consensus Cloud and CyberArk Software

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

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.