Correlation Between CyberArk Software and RWE Aktiengesellscha

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

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

Diversification Opportunities for CyberArk Software and RWE Aktiengesellscha

-0.14

Correlation Coefficient

CyberArk Software  RWE Aktiengesellscha

Good diversification

The 3 months correlation between CyberArk and RWE is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and RWE Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RWE Aktiengesellschaft 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 RWE Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RWE Aktiengesellschaft has no effect on the direction of CyberArk Software i.e., CyberArk Software and RWE Aktiengesellscha go up and down completely randomly.

Pair Corralation between CyberArk Software and RWE Aktiengesellscha

Assuming the 90 days trading horizon CyberArk Software is expected to generate 1.09 times more return on investment than RWE Aktiengesellscha. However, CyberArk Software is 1.09 times more volatile than RWE Aktiengesellschaft. It trades about 0.1 of its potential returns per unit of risk. RWE Aktiengesellschaft is currently generating about -0.01 per unit of risk. If you would invest  11,775  in CyberArk Software on October 11, 2024 and sell it today you would earn a total of  21,195  from holding CyberArk Software or generate 180.0% return on investment over 90 days.

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

CyberArk Software  vs.  RWE Aktiengesellschaft

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.

RWE Aktiengesellschaft

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RWE Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, RWE Aktiengesellscha is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CyberArk Software and RWE Aktiengesellscha

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

The idea behind CyberArk Software and RWE Aktiengesellschaft 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.