Correlation Between Microsoft and Crowdstrike Holdings
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Crowdstrike Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Crowdstrike Holdings, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Crowdstrike Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Crowdstrike Holdings.
Diversification Opportunities for Microsoft and Crowdstrike Holdings
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Microsoft and Crowdstrike is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Crowdstrike Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crowdstrike Holdings and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Crowdstrike Holdings go up and down completely randomly.
Pair Corralation between Microsoft and Crowdstrike Holdings
Given the investment horizon of 90 days Microsoft is expected to generate 2.28 times less return on investment than Crowdstrike Holdings. But when comparing it to its historical volatility, Microsoft is 1.93 times less risky than Crowdstrike Holdings. It trades about 0.08 of its potential returns per unit of risk. Crowdstrike Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 12,400 in Crowdstrike Holdings on August 23, 2024 and sell it today you would earn a total of 23,355 from holding Crowdstrike Holdings or generate 188.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Crowdstrike Holdings
Performance |
| Timeline |
| Microsoft |
| Crowdstrike Holdings |
Microsoft and Crowdstrike Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Crowdstrike Holdings
The main advantage of trading using opposite Microsoft and Crowdstrike Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Crowdstrike Holdings vs. Adobe Systems Incorporated | Crowdstrike Holdings vs. Palantir Technologies | 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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