Correlation Between Cloudflare and Marqeta
Can any of the company-specific risk be diversified away by investing in both Cloudflare and Marqeta 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 Marqeta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cloudflare and Marqeta, you can compare the effects of market volatilities on Cloudflare and Marqeta 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 Marqeta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloudflare and Marqeta.
Diversification Opportunities for Cloudflare and Marqeta
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cloudflare and Marqeta is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and Marqeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marqeta 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 Marqeta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marqeta has no effect on the direction of Cloudflare i.e., Cloudflare and Marqeta go up and down completely randomly.
Pair Corralation between Cloudflare and Marqeta
Considering the 90-day investment horizon Cloudflare is expected to generate 3.01 times more return on investment than Marqeta. However, Cloudflare is 3.01 times more volatile than Marqeta. It trades about 0.42 of its potential returns per unit of risk. Marqeta is currently generating about -0.13 per unit of risk. If you would invest 11,716 in Cloudflare on November 18, 2024 and sell it today you would earn a total of 5,400 from holding Cloudflare or generate 46.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cloudflare vs. Marqeta
Performance |
| Timeline |
| Cloudflare |
| Marqeta |
Cloudflare and Marqeta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cloudflare and Marqeta
The main advantage of trading using opposite Cloudflare and Marqeta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloudflare position performs unexpectedly, Marqeta 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 Marqeta will offset losses from the drop in Marqeta's long position.| Cloudflare vs. Palo Alto Networks | Cloudflare vs. Zscaler | Cloudflare vs. Okta Inc | Cloudflare vs. Adobe Systems Incorporated |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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