Correlation Between CyberArk Software and JD SPORTS

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

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

Diversification Opportunities for CyberArk Software and JD SPORTS

-0.8

Correlation Coefficient

CyberArk Software  JD SPORTS

Pay attention - limited upside

The 3 months correlation between CyberArk and 9JD is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and JD SPORTS FASH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD SPORTS FASH and CyberArk Software 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 CyberArk Software are associated (or correlated) with JD SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD SPORTS FASH has no effect on the direction of CyberArk Software i.e., CyberArk Software and JD SPORTS go up and down completely randomly.

Pair Corralation between CyberArk Software and JD SPORTS

Assuming the 90 days trading horizon CyberArk Software is expected to generate 0.8 times more return on investment than JD SPORTS. However, CyberArk Software is 1.26 times less risky than JD SPORTS. It trades about 0.13 of its potential returns per unit of risk. JD SPORTS FASH is currently generating about -0.1 per unit of risk. If you would invest  24,810  in CyberArk Software on September 4, 2024 and sell it today you would earn a total of  5,220  from holding CyberArk Software or generate 21.04% return on investment over 90 days.

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

CyberArk Software  vs.  JD SPORTS FASH

CyberArk Software

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CyberArk Software are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CyberArk Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

JD SPORTS FASH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD SPORTS FASH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CyberArk Software and JD SPORTS

The main advantage of trading using opposite CyberArk Software and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CyberArk Software position performs unexpectedly, JD SPORTS 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 JD SPORTS will offset losses from the drop in JD SPORTS's long position.

The idea behind CyberArk Software and JD SPORTS FASH 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.