Correlation Between CrowdStrike Holdings and Adobe

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

By analyzing existing cross correlation between CrowdStrike Holdings and Adobe Inc, you can compare the effects of market volatilities on CrowdStrike Holdings and Adobe 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 Adobe. Check out your portfolio center. Please also check ongoing floating volatility patterns of CrowdStrike Holdings and Adobe.

Diversification Opportunities for CrowdStrike Holdings and Adobe

0.38

Correlation Coefficient

CrowdStrike Holdings  Adobe

Weak diversification

The 3 months correlation between CrowdStrike and Adobe is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CrowdStrike Holdings and Adobe Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Inc 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 Adobe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adobe Inc has no effect on the direction of CrowdStrike Holdings i.e., CrowdStrike Holdings and Adobe go up and down completely randomly.

Pair Corralation between CrowdStrike Holdings and Adobe

Assuming the 90 days horizon CrowdStrike Holdings is expected to generate 1.15 times more return on investment than Adobe. However, CrowdStrike Holdings is 1.15 times more volatile than Adobe Inc. It trades about 0.19 of its potential returns per unit of risk. Adobe Inc is currently generating about -0.03 per unit of risk. If you would invest  25,540  in CrowdStrike Holdings on September 27, 2024 and sell it today you would earn a total of  9,385  from holding CrowdStrike Holdings or generate 36.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CrowdStrike Holdings  vs.  Adobe Inc

CrowdStrike Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CrowdStrike Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CrowdStrike Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Adobe Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adobe Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Adobe is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CrowdStrike Holdings and Adobe

The main advantage of trading using opposite CrowdStrike Holdings and Adobe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CrowdStrike Holdings position performs unexpectedly, Adobe 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 Adobe will offset losses from the drop in Adobe's long position.

The idea behind CrowdStrike Holdings and Adobe Inc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.