Correlation Between Crowdstrike Holdings and StoneCo

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

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

Diversification Opportunities for Crowdstrike Holdings and StoneCo

-0.82

Correlation Coefficient

Crowdstrike Holdings  StoneCo

Pay attention - limited upside

The 3 months correlation between Crowdstrike and StoneCo is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Crowdstrike Holdings and StoneCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StoneCo 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 StoneCo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StoneCo has no effect on the direction of Crowdstrike Holdings i.e., Crowdstrike Holdings and StoneCo go up and down completely randomly.

Pair Corralation between Crowdstrike Holdings and StoneCo

Given the investment horizon of 90 days Crowdstrike Holdings is expected to generate 0.95 times more return on investment than StoneCo. However, Crowdstrike Holdings is 1.06 times less risky than StoneCo. It trades about 0.1 of its potential returns per unit of risk. StoneCo is currently generating about 0.0 per unit of risk. If you would invest  10,457  in Crowdstrike Holdings on September 19, 2024 and sell it today you would earn a total of  24,461  from holding Crowdstrike Holdings or generate 233.92% return on investment over 90 days.

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

Crowdstrike Holdings  vs.  StoneCo

Crowdstrike Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crowdstrike Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Crowdstrike Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

StoneCo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StoneCo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Crowdstrike Holdings and StoneCo

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

The idea behind Crowdstrike Holdings and StoneCo 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.

Check out your portfolio center.

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.