Correlation Between Varonis Systems and CiT

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

By analyzing existing cross correlation between Varonis Systems and CiT Inc, you can compare the effects of market volatilities on Varonis Systems and CiT 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 Varonis Systems with a short position of CiT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varonis Systems and CiT.

Diversification Opportunities for Varonis Systems and CiT

-0.24

Correlation Coefficient

Varonis Systems  CiT

Very good diversification

The 3 months correlation between Varonis and CiT is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Varonis Systems and CiT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CiT Inc and Varonis Systems 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 Varonis Systems are associated (or correlated) with CiT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CiT Inc has no effect on the direction of Varonis Systems i.e., Varonis Systems and CiT go up and down completely randomly.

Pair Corralation between Varonis Systems and CiT

Given the investment horizon of 90 days Varonis Systems is expected to under-perform the CiT. But the stock apears to be less risky and, when comparing its historical volatility, Varonis Systems is 1.07 times less risky than CiT. The stock trades about -0.05 of its potential returns per unit of risk. The CiT Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  608.00  in CiT Inc on December 27, 2024 and sell it today you would earn a total of  8.30  from holding CiT Inc or generate 1.37% return on investment over 90 days.

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

Varonis Systems  vs.  CiT Inc

Varonis Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Varonis Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CiT Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CiT Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CiT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Varonis Systems and CiT

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

The idea behind Varonis Systems and CiT 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.