Correlation Between Godaddy and Crowdstrike Holdings

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

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

Diversification Opportunities for Godaddy and Crowdstrike Holdings

0.95

Correlation Coefficient

Godaddy  Crowdstrike Holdings

Almost no diversification

The 3 months correlation between Godaddy and Crowdstrike is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Godaddy and Crowdstrike Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crowdstrike Holdings and Godaddy 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 Godaddy are associated (or correlated) with Crowdstrike Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crowdstrike Holdings has no effect on the direction of Godaddy i.e., Godaddy and Crowdstrike Holdings go up and down completely randomly.

Pair Corralation between Godaddy and Crowdstrike Holdings

Given the investment horizon of 90 days Godaddy is expected to generate 1.4 times less return on investment than Crowdstrike Holdings. But when comparing it to its historical volatility, Godaddy is 1.79 times less risky than Crowdstrike Holdings. It trades about 0.14 of its potential returns per unit of risk. Crowdstrike Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  10,942  in Crowdstrike Holdings on September 26, 2024 and sell it today you would earn a total of  25,637  from holding Crowdstrike Holdings or generate 234.3% return on investment over 90 days.

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

Godaddy  vs.  Crowdstrike Holdings

Godaddy

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Godaddy are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Godaddy showed solid returns over the last few months and may actually be approaching a breakup point.

Crowdstrike Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crowdstrike Holdings are ranked lower than 13 (%) 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.

Pair Trading with Godaddy and Crowdstrike Holdings

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

The idea behind Godaddy and Crowdstrike Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.