Correlation Between Crowdstrike Holdings and Stem

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

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

Diversification Opportunities for Crowdstrike Holdings and Stem

-0.02

Correlation Coefficient

Crowdstrike Holdings  Stem

Good diversification

The 3 months correlation between Crowdstrike and Stem is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Crowdstrike Holdings and Stem Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stem Inc 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 Stem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stem Inc has no effect on the direction of Crowdstrike Holdings i.e., Crowdstrike Holdings and Stem go up and down completely randomly.

Pair Corralation between Crowdstrike Holdings and Stem

Given the investment horizon of 90 days Crowdstrike Holdings is expected to generate 0.27 times more return on investment than Stem. However, Crowdstrike Holdings is 3.76 times less risky than Stem. It trades about 0.03 of its potential returns per unit of risk. Stem Inc is currently generating about -0.03 per unit of risk. If you would invest  34,931  in Crowdstrike Holdings on December 30, 2024 and sell it today you would earn a total of  780.00  from holding Crowdstrike Holdings or generate 2.23% return on investment over 90 days.

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

Crowdstrike Holdings  vs.  Stem Inc

Crowdstrike Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crowdstrike Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Crowdstrike Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Stem Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stem Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Crowdstrike Holdings and Stem

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

The idea behind Crowdstrike Holdings and Stem 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.