Correlation Between StoneCo and Crowdstrike Holdings

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

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

Diversification Opportunities for StoneCo and Crowdstrike Holdings

-0.82

Correlation Coefficient

StoneCo  Crowdstrike Holdings

Pay attention - limited upside

The 3 months correlation between StoneCo and Crowdstrike is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding StoneCo and Crowdstrike Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crowdstrike Holdings and StoneCo 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 StoneCo 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 StoneCo i.e., StoneCo and Crowdstrike Holdings go up and down completely randomly.

Pair Corralation between StoneCo and Crowdstrike Holdings

Given the investment horizon of 90 days StoneCo is expected to generate 27.21 times less return on investment than Crowdstrike Holdings. In addition to that, StoneCo is 1.06 times more volatile than Crowdstrike Holdings. It trades about 0.0 of its total potential returns per unit of risk. Crowdstrike Holdings is currently generating about 0.1 per unit of volatility. 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

StoneCo  vs.  Crowdstrike Holdings

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.

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.

Pair Trading with StoneCo and Crowdstrike Holdings

The main advantage of trading using opposite StoneCo and Crowdstrike Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if StoneCo 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 StoneCo 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.