Correlation Between Cloudflare and Shift4 Payments
Can any of the company-specific risk be diversified away by investing in both Cloudflare and Shift4 Payments 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 Shift4 Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cloudflare and Shift4 Payments, you can compare the effects of market volatilities on Cloudflare and Shift4 Payments 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 Shift4 Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloudflare and Shift4 Payments.
Diversification Opportunities for Cloudflare and Shift4 Payments
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cloudflare and Shift4 is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and Shift4 Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shift4 Payments 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 Shift4 Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shift4 Payments has no effect on the direction of Cloudflare i.e., Cloudflare and Shift4 Payments go up and down completely randomly.
Pair Corralation between Cloudflare and Shift4 Payments
Considering the 90-day investment horizon Cloudflare is expected to generate 1.12 times less return on investment than Shift4 Payments. But when comparing it to its historical volatility, Cloudflare is 1.05 times less risky than Shift4 Payments. It trades about 0.28 of its potential returns per unit of risk. Shift4 Payments is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 9,200 in Shift4 Payments on August 27, 2024 and sell it today you would earn a total of 1,934 from holding Shift4 Payments or generate 21.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cloudflare vs. Shift4 Payments
Performance |
| Timeline |
| Cloudflare |
| Shift4 Payments |
Cloudflare and Shift4 Payments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cloudflare and Shift4 Payments
The main advantage of trading using opposite Cloudflare and Shift4 Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloudflare position performs unexpectedly, Shift4 Payments 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 Shift4 Payments will offset losses from the drop in Shift4 Payments' long position.| Cloudflare vs. GigaCloud Technology Class | Cloudflare vs. Arqit Quantum | Cloudflare vs. Telos Corp | Cloudflare vs. Cemtrex |
| Shift4 Payments vs. Oneconnect Financial Technology | Shift4 Payments vs. Global Business Travel | Shift4 Payments vs. Alight Inc | Shift4 Payments vs. CS Disco LLC |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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