Correlation Between CrowdStrike Holdings, and Applied Materials
Can any of the company-specific risk be diversified away by investing in both CrowdStrike Holdings, and Applied Materials 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 Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CrowdStrike Holdings, and Applied Materials, you can compare the effects of market volatilities on CrowdStrike Holdings, and Applied Materials 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 Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of CrowdStrike Holdings, and Applied Materials.
Diversification Opportunities for CrowdStrike Holdings, and Applied Materials
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between CrowdStrike and Applied is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding CrowdStrike Holdings, and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials 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 Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of CrowdStrike Holdings, i.e., CrowdStrike Holdings, and Applied Materials go up and down completely randomly.
Pair Corralation between CrowdStrike Holdings, and Applied Materials
Assuming the 90 days trading horizon CrowdStrike Holdings, is expected to generate 1.13 times more return on investment than Applied Materials. However, CrowdStrike Holdings, is 1.13 times more volatile than Applied Materials. It trades about 0.07 of its potential returns per unit of risk. Applied Materials is currently generating about 0.05 per unit of risk. If you would invest 544,600 in CrowdStrike Holdings, on November 3, 2024 and sell it today you would earn a total of 278,558 from holding CrowdStrike Holdings, or generate 51.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CrowdStrike Holdings, vs. Applied Materials
Performance |
| Timeline |
| CrowdStrike Holdings, |
| Applied Materials |
CrowdStrike Holdings, and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CrowdStrike Holdings, and Applied Materials
The main advantage of trading using opposite CrowdStrike Holdings, and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CrowdStrike Holdings, position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| CrowdStrike Holdings, vs. Microsoft | CrowdStrike Holdings, vs. Oracle | CrowdStrike Holdings, vs. F5 Networks |
| Applied Materials vs. Delta Air Lines | Applied Materials vs. GMxico Transportes SAB | Applied Materials vs. First Republic Bank | Applied Materials vs. The Home Depot |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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