Correlation Between CyberArk Software and ScanSource

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

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

Diversification Opportunities for CyberArk Software and ScanSource

0.8

Correlation Coefficient

CyberArk Software  ScanSource

Very poor diversification

The 3 months correlation between CyberArk and ScanSource is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CyberArk Software and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of CyberArk Software i.e., CyberArk Software and ScanSource go up and down completely randomly.

Pair Corralation between CyberArk Software and ScanSource

Assuming the 90 days trading horizon CyberArk Software is expected to generate 1.15 times less return on investment than ScanSource. In addition to that, CyberArk Software is 1.13 times more volatile than ScanSource. It trades about 0.16 of its total potential returns per unit of risk. ScanSource is currently generating about 0.21 per unit of volatility. If you would invest  2,700  in ScanSource on April 21, 2025 and sell it today you would earn a total of  800.00  from holding ScanSource or generate 29.63% return on investment over 90 days.

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

CyberArk Software  vs.  ScanSource

CyberArk Software

Risk-Adjusted Performance

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.

ScanSource

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ScanSource reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CyberArk Software and ScanSource

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

The idea behind CyberArk Software and ScanSource 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.