Correlation Between Shopify and CrowdStrike Holdings

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

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

Diversification Opportunities for Shopify and CrowdStrike Holdings

0.71

Correlation Coefficient

Shopify  CrowdStrike Holdings

Poor diversification

The 3 months correlation between Shopify and CrowdStrike is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and CrowdStrike Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CrowdStrike Holdings and Shopify 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 Shopify 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 Shopify i.e., Shopify and CrowdStrike Holdings go up and down completely randomly.

Pair Corralation between Shopify and CrowdStrike Holdings

Assuming the 90 days horizon Shopify is expected to generate 1.23 times more return on investment than CrowdStrike Holdings. However, Shopify is 1.23 times more volatile than CrowdStrike Holdings. It trades about 0.18 of its potential returns per unit of risk. CrowdStrike Holdings is currently generating about 0.11 per unit of risk. If you would invest  8,085  in Shopify on April 23, 2025 and sell it today you would earn a total of  2,957  from holding Shopify or generate 36.57% return on investment over 90 days.

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

Shopify  vs.  CrowdStrike Holdings

Shopify

Risk-Adjusted Performance

Good

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

CrowdStrike Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CrowdStrike Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CrowdStrike Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shopify and CrowdStrike Holdings

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

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.