Correlation Between CyberArk Software and Mastercard

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

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

Diversification Opportunities for CyberArk Software and Mastercard

0.61

Correlation Coefficient

CyberArk Software  Mastercard

Poor diversification

The 3 months correlation between CyberArk and Mastercard is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard 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 Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of CyberArk Software i.e., CyberArk Software and Mastercard go up and down completely randomly.

Pair Corralation between CyberArk Software and Mastercard

Assuming the 90 days trading horizon CyberArk Software is expected to generate 2.28 times more return on investment than Mastercard. However, CyberArk Software is 2.28 times more volatile than Mastercard. It trades about 0.16 of its potential returns per unit of risk. Mastercard is currently generating about 0.11 per unit of risk. If you would invest  27,100  in CyberArk Software on October 24, 2024 and sell it today you would earn a total of  7,340  from holding CyberArk Software or generate 27.08% 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.  Mastercard

CyberArk Software

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CyberArk Software are ranked lower than 12 (%) 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.

Mastercard

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mastercard are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward indicators, Mastercard may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CyberArk Software and Mastercard

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

The idea behind CyberArk Software and Mastercard 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.