Correlation Between CrowdStrike Holdings and ADYEN NV
Can any of the company-specific risk be diversified away by investing in both CrowdStrike Holdings and ADYEN NV 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 ADYEN NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CrowdStrike Holdings and ADYEN NV UNSPADR001, you can compare the effects of market volatilities on CrowdStrike Holdings and ADYEN NV 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 ADYEN NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of CrowdStrike Holdings and ADYEN NV.
Diversification Opportunities for CrowdStrike Holdings and ADYEN NV
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CrowdStrike and ADYEN is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding CrowdStrike Holdings and ADYEN NV UNSPADR001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADYEN NV UNSPADR001 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 ADYEN NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADYEN NV UNSPADR001 has no effect on the direction of CrowdStrike Holdings i.e., CrowdStrike Holdings and ADYEN NV go up and down completely randomly.
Pair Corralation between CrowdStrike Holdings and ADYEN NV
Assuming the 90 days horizon CrowdStrike Holdings is expected to generate 0.84 times more return on investment than ADYEN NV. However, CrowdStrike Holdings is 1.19 times less risky than ADYEN NV. It trades about 0.16 of its potential returns per unit of risk. ADYEN NV UNSPADR001 is currently generating about 0.06 per unit of risk. If you would invest 29,575 in CrowdStrike Holdings on November 6, 2024 and sell it today you would earn a total of 8,740 from holding CrowdStrike Holdings or generate 29.55% 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. ADYEN NV UNSPADR001
Performance |
| Timeline |
| CrowdStrike Holdings |
| ADYEN NV UNSPADR001 |
CrowdStrike Holdings and ADYEN NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CrowdStrike Holdings and ADYEN NV
The main advantage of trading using opposite CrowdStrike Holdings and ADYEN NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CrowdStrike Holdings position performs unexpectedly, ADYEN NV 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 ADYEN NV will offset losses from the drop in ADYEN NV's long position.The idea behind CrowdStrike Holdings and ADYEN NV UNSPADR001 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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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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