Correlation Between Crowdstrike Holdings and MongoDB

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

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

Diversification Opportunities for Crowdstrike Holdings and MongoDB

0.34

Correlation Coefficient

Crowdstrike Holdings  MongoDB

Weak diversification

The 3 months correlation between Crowdstrike and MongoDB is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Crowdstrike Holdings and MongoDB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MongoDB 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 MongoDB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MongoDB has no effect on the direction of Crowdstrike Holdings i.e., Crowdstrike Holdings and MongoDB go up and down completely randomly.

Pair Corralation between Crowdstrike Holdings and MongoDB

Given the investment horizon of 90 days Crowdstrike Holdings is expected to generate 0.77 times more return on investment than MongoDB. However, Crowdstrike Holdings is 1.3 times less risky than MongoDB. It trades about 0.08 of its potential returns per unit of risk. MongoDB is currently generating about 0.06 per unit of risk. If you would invest  14,005  in Crowdstrike Holdings on August 15, 2024 and sell it today you would earn a total of  20,345  from holding Crowdstrike Holdings or generate 145.27% 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.  MongoDB

Crowdstrike Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Crowdstrike Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Crowdstrike Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

MongoDB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MongoDB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, MongoDB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crowdstrike Holdings and MongoDB

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

The idea behind Crowdstrike Holdings and MongoDB 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.