Correlation Between Crowdstrike Holdings and CyberArk Software

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

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

Diversification Opportunities for Crowdstrike Holdings and CyberArk Software

0.81

Correlation Coefficient

Crowdstrike Holdings  CyberArk Software

Very poor diversification

The 3 months correlation between Crowdstrike and CyberArk is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Crowdstrike Holdings and CyberArk Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberArk Software and Crowdstrike Holdings 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 Crowdstrike Holdings are associated (or correlated) with CyberArk Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberArk Software has no effect on the direction of Crowdstrike Holdings i.e., Crowdstrike Holdings and CyberArk Software go up and down completely randomly.

Pair Corralation between Crowdstrike Holdings and CyberArk Software

Given the investment horizon of 90 days Crowdstrike Holdings is expected to generate 1.23 times more return on investment than CyberArk Software. However, Crowdstrike Holdings is 1.23 times more volatile than CyberArk Software. It trades about 0.15 of its potential returns per unit of risk. CyberArk Software is currently generating about 0.01 per unit of risk. If you would invest  31,052  in Crowdstrike Holdings on August 13, 2024 and sell it today you would earn a total of  1,951  from holding Crowdstrike Holdings or generate 6.28% return on investment over 90 days.

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

Crowdstrike Holdings  vs.  CyberArk Software

Crowdstrike Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crowdstrike Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Crowdstrike Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

CyberArk Software

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CyberArk Software are ranked lower than 6 (%) 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 December 2024.

Pair Trading with Crowdstrike Holdings and CyberArk Software

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

The idea behind Crowdstrike Holdings and CyberArk Software 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.