Correlation Between CyberArk Software and Zscaler

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

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

Diversification Opportunities for CyberArk Software and Zscaler

0.68

Correlation Coefficient

CyberArk Software  Zscaler

Poor diversification

The 3 months correlation between CyberArk and Zscaler is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and Zscaler in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zscaler 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 Zscaler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zscaler has no effect on the direction of CyberArk Software i.e., CyberArk Software and Zscaler go up and down completely randomly.

Pair Corralation between CyberArk Software and Zscaler

Given the investment horizon of 90 days CyberArk Software is expected to generate 1.74 times less return on investment than Zscaler. In addition to that, CyberArk Software is 1.15 times more volatile than Zscaler. It trades about 0.05 of its total potential returns per unit of risk. Zscaler is currently generating about 0.11 per unit of volatility. If you would invest  18,313  in Zscaler on December 29, 2024 and sell it today you would earn a total of  2,632  from holding Zscaler or generate 14.37% 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.  Zscaler

CyberArk Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CyberArk Software are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental drivers, CyberArk Software may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Zscaler

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zscaler are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Zscaler unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CyberArk Software and Zscaler

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

The idea behind CyberArk Software and Zscaler 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.