Correlation Between Crowdstrike Holdings and Pagaya Technologies

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

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

Diversification Opportunities for Crowdstrike Holdings and Pagaya Technologies

-0.37

Correlation Coefficient

Crowdstrike Holdings  Pagaya Technologies

Very good diversification

The 3 months correlation between Crowdstrike and Pagaya is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Crowdstrike Holdings and Pagaya Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pagaya Technologies 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 Pagaya Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pagaya Technologies has no effect on the direction of Crowdstrike Holdings i.e., Crowdstrike Holdings and Pagaya Technologies go up and down completely randomly.

Pair Corralation between Crowdstrike Holdings and Pagaya Technologies

Given the investment horizon of 90 days Crowdstrike Holdings is expected to generate 0.34 times more return on investment than Pagaya Technologies. However, Crowdstrike Holdings is 2.94 times less risky than Pagaya Technologies. It trades about 0.23 of its potential returns per unit of risk. Pagaya Technologies is currently generating about -0.02 per unit of risk. If you would invest  25,913  in Crowdstrike Holdings on September 13, 2024 and sell it today you would earn a total of  10,384  from holding Crowdstrike Holdings or generate 40.07% 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.  Pagaya Technologies

Crowdstrike Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Crowdstrike Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Crowdstrike Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pagaya Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pagaya Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Crowdstrike Holdings and Pagaya Technologies

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

The idea behind Crowdstrike Holdings and Pagaya Technologies 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.