Correlation Between Crowdstrike Holdings and Zscaler

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

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

Diversification Opportunities for Crowdstrike Holdings and Zscaler

0.57

Correlation Coefficient

Crowdstrike Holdings  Zscaler

Very weak diversification

The 3 months correlation between Crowdstrike and Zscaler is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Crowdstrike Holdings and Zscaler in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zscaler 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 Zscaler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zscaler has no effect on the direction of Crowdstrike Holdings i.e., Crowdstrike Holdings and Zscaler go up and down completely randomly.

Pair Corralation between Crowdstrike Holdings and Zscaler

Given the investment horizon of 90 days Crowdstrike Holdings is expected to generate 1.19 times more return on investment than Zscaler. However, Crowdstrike Holdings is 1.19 times more volatile than Zscaler. It trades about 0.07 of its potential returns per unit of risk. Zscaler is currently generating about -0.03 per unit of risk. If you would invest  34,759  in Crowdstrike Holdings on November 27, 2024 and sell it today you would earn a total of  3,188  from holding Crowdstrike Holdings or generate 9.17% return on investment over 90 days.

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

Crowdstrike Holdings  vs.  Zscaler

Crowdstrike Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crowdstrike Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Crowdstrike Holdings may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Zscaler

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zscaler has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Zscaler is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Crowdstrike Holdings and Zscaler

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

The idea behind Crowdstrike Holdings and Zscaler 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.