Correlation Between Crowdstrike Holdings and Endava

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

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

Diversification Opportunities for Crowdstrike Holdings and Endava

0.85

Correlation Coefficient

Crowdstrike Holdings  Endava

Very poor diversification

The 3 months correlation between Crowdstrike and Endava is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Crowdstrike Holdings and Endava in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endava 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 Endava. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endava has no effect on the direction of Crowdstrike Holdings i.e., Crowdstrike Holdings and Endava go up and down completely randomly.

Pair Corralation between Crowdstrike Holdings and Endava

Given the investment horizon of 90 days Crowdstrike Holdings is expected to under-perform the Endava. In addition to that, Crowdstrike Holdings is 1.44 times more volatile than Endava. It trades about -0.01 of its total potential returns per unit of risk. Endava is currently generating about 0.23 per unit of volatility. If you would invest  2,850  in Endava on October 6, 2024 and sell it today you would earn a total of  276.00  from holding Endava or generate 9.68% 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.  Endava

Crowdstrike Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crowdstrike Holdings are ranked lower than 12 (%) 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.

Endava

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Endava are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Endava sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crowdstrike Holdings and Endava

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

The idea behind Crowdstrike Holdings and Endava 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.