Correlation Between CyberArk Software and Apple

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

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

Diversification Opportunities for CyberArk Software and Apple

0.9

Correlation Coefficient

CyberArk Software  Apple

Almost no diversification

The 3 months correlation between CyberArk and Apple is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of CyberArk Software i.e., CyberArk Software and Apple go up and down completely randomly.

Pair Corralation between CyberArk Software and Apple

Assuming the 90 days trading horizon CyberArk Software is expected to generate 2.04 times more return on investment than Apple. However, CyberArk Software is 2.04 times more volatile than Apple Inc. It trades about 0.11 of its potential returns per unit of risk. Apple Inc is currently generating about 0.14 per unit of risk. If you would invest  25,490  in CyberArk Software on September 3, 2024 and sell it today you would earn a total of  4,540  from holding CyberArk Software or generate 17.81% return on investment over 90 days.

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

CyberArk Software  vs.  Apple Inc

CyberArk Software

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CyberArk Software are ranked lower than 8 (%) 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.

Apple Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CyberArk Software and Apple

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

The idea behind CyberArk Software and Apple Inc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.