Correlation Between Cloudflare and Edgio
Can any of the company-specific risk be diversified away by investing in both Cloudflare and Edgio 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 Cloudflare and Edgio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cloudflare and Edgio Inc, you can compare the effects of market volatilities on Cloudflare and Edgio 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 Cloudflare with a short position of Edgio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloudflare and Edgio.
Diversification Opportunities for Cloudflare and Edgio
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cloudflare and Edgio is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and Edgio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgio Inc and Cloudflare 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 Cloudflare are associated (or correlated) with Edgio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgio Inc has no effect on the direction of Cloudflare i.e., Cloudflare and Edgio go up and down completely randomly.
Pair Corralation between Cloudflare and Edgio
Considering the 90-day investment horizon Cloudflare is expected to generate 127.4 times less return on investment than Edgio. But when comparing it to its historical volatility, Cloudflare is 106.9 times less risky than Edgio. It trades about 0.27 of its potential returns per unit of risk. Edgio Inc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Edgio Inc on August 28, 2024 and sell it today you would lose (1.00) from holding Edgio Inc or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Cloudflare vs. Edgio Inc
Performance |
| Timeline |
| Cloudflare |
| Edgio Inc |
Cloudflare and Edgio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cloudflare and Edgio
The main advantage of trading using opposite Cloudflare and Edgio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloudflare position performs unexpectedly, Edgio 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 Edgio will offset losses from the drop in Edgio's long position.| Cloudflare vs. GigaCloud Technology Class | Cloudflare vs. Arqit Quantum | Cloudflare vs. Telos Corp | Cloudflare vs. Cemtrex |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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