Correlation Between Confluent and Couchbase

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

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

Diversification Opportunities for Confluent and Couchbase

0.76

Correlation Coefficient

Confluent  Couchbase

Poor diversification

The 3 months correlation between Confluent and Couchbase is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Confluent and Couchbase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Couchbase and Confluent 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 Confluent are associated (or correlated) with Couchbase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Couchbase has no effect on the direction of Confluent i.e., Confluent and Couchbase go up and down completely randomly.

Pair Corralation between Confluent and Couchbase

Given the investment horizon of 90 days Confluent is expected to generate 2.42 times less return on investment than Couchbase. But when comparing it to its historical volatility, Confluent is 1.23 times less risky than Couchbase. It trades about 0.08 of its potential returns per unit of risk. Couchbase is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,711  in Couchbase on April 29, 2025 and sell it today you would earn a total of  718.00  from holding Couchbase or generate 41.96% return on investment over 90 days.

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

Confluent  vs.  Couchbase

Confluent

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Confluent are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Confluent unveiled solid returns over the last few months and may actually be approaching a breakup point.

Couchbase

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Couchbase are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Couchbase exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Confluent and Couchbase

The main advantage of trading using opposite Confluent and Couchbase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Confluent position performs unexpectedly, Couchbase 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 Couchbase will offset losses from the drop in Couchbase's long position.

The idea behind Confluent and Couchbase 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.