Correlation Between CyberArk Software and CDW

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

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

Diversification Opportunities for CyberArk Software and CDW

0.76

Correlation Coefficient

CyberArk Software  CDW

Poor diversification

The 3 months correlation between CyberArk and CDW is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and CDW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corporation 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 CDW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corporation has no effect on the direction of CyberArk Software i.e., CyberArk Software and CDW go up and down completely randomly.

Pair Corralation between CyberArk Software and CDW

Assuming the 90 days trading horizon CyberArk Software is expected to generate 1.81 times more return on investment than CDW. However, CyberArk Software is 1.81 times more volatile than CDW Corporation. It trades about 0.04 of its potential returns per unit of risk. CDW Corporation is currently generating about -0.07 per unit of risk. If you would invest  29,980  in CyberArk Software on December 20, 2024 and sell it today you would earn a total of  1,440  from holding CyberArk Software or generate 4.8% return on investment over 90 days.

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

CyberArk Software  vs.  CDW Corp.

CyberArk Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CyberArk Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CyberArk Software may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CDW Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days CDW Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CyberArk Software and CDW

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

The idea behind CyberArk Software and CDW Corporation 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.