Correlation Between Palo Alto and Crowdstrike Holdings

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

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

Diversification Opportunities for Palo Alto and Crowdstrike Holdings

0.68

Correlation Coefficient

Palo Alto  Crowdstrike Holdings

Poor diversification

The 3 months correlation between Palo and Crowdstrike is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Palo Alto Networks and Crowdstrike Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crowdstrike Holdings and Palo Alto 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 Palo Alto Networks 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 Palo Alto i.e., Palo Alto and Crowdstrike Holdings go up and down completely randomly.

Pair Corralation between Palo Alto and Crowdstrike Holdings

Given the investment horizon of 90 days Palo Alto Networks is expected to under-perform the Crowdstrike Holdings. In addition to that, Palo Alto is 1.05 times more volatile than Crowdstrike Holdings. It trades about -0.06 of its total potential returns per unit of risk. Crowdstrike Holdings is currently generating about 0.07 per unit of volatility. If you would invest  42,252  in Crowdstrike Holdings on May 7, 2025 and sell it today you would earn a total of  3,234  from holding Crowdstrike Holdings or generate 7.65% return on investment over 90 days.

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

Palo Alto Networks  vs.  Crowdstrike Holdings

Palo Alto Networks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Palo Alto Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Crowdstrike Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crowdstrike Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Crowdstrike Holdings may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Palo Alto and Crowdstrike Holdings

The main advantage of trading using opposite Palo Alto and Crowdstrike Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palo Alto 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.

The idea behind Palo Alto Networks and Crowdstrike Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.