Correlation Between Crowdstrike Holdings and Xero
Can any of the company-specific risk be diversified away by investing in both Crowdstrike Holdings and Xero 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 Xero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crowdstrike Holdings and Xero Limited, you can compare the effects of market volatilities on Crowdstrike Holdings and Xero 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 Xero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crowdstrike Holdings and Xero.
Diversification Opportunities for Crowdstrike Holdings and Xero
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Crowdstrike and Xero is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Crowdstrike Holdings and Xero Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xero Limited 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 Xero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xero Limited has no effect on the direction of Crowdstrike Holdings i.e., Crowdstrike Holdings and Xero go up and down completely randomly.
Pair Corralation between Crowdstrike Holdings and Xero
Given the investment horizon of 90 days Crowdstrike Holdings is expected to generate 2.35 times more return on investment than Xero. However, Crowdstrike Holdings is 2.35 times more volatile than Xero Limited. It trades about 0.32 of its potential returns per unit of risk. Xero Limited is currently generating about 0.54 per unit of risk. If you would invest 29,687 in Crowdstrike Holdings on September 1, 2024 and sell it today you would earn a total of 4,910 from holding Crowdstrike Holdings or generate 16.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crowdstrike Holdings vs. Xero Limited
Performance |
| Timeline |
| Crowdstrike Holdings |
| Xero Limited |
Crowdstrike Holdings and Xero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crowdstrike Holdings and Xero
The main advantage of trading using opposite Crowdstrike Holdings and Xero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crowdstrike Holdings position performs unexpectedly, Xero 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 Xero will offset losses from the drop in Xero's long position.| Crowdstrike Holdings vs. Adobe Systems Incorporated | Crowdstrike Holdings vs. Palantir Technologies Class | Crowdstrike Holdings vs. Zscaler | Crowdstrike Holdings vs. Okta Inc |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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