Correlation Between Confluent and Cloudflare

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

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

Diversification Opportunities for Confluent and Cloudflare

0.21

Correlation Coefficient

Confluent  Cloudflare

Modest diversification

The 3 months correlation between Confluent and Cloudflare is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Confluent and Cloudflare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudflare 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 Cloudflare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudflare has no effect on the direction of Confluent i.e., Confluent and Cloudflare go up and down completely randomly.

Pair Corralation between Confluent and Cloudflare

Given the investment horizon of 90 days Confluent is expected to under-perform the Cloudflare. In addition to that, Confluent is 2.07 times more volatile than Cloudflare. It trades about -0.07 of its total potential returns per unit of risk. Cloudflare is currently generating about 0.3 per unit of volatility. If you would invest  14,236  in Cloudflare on May 10, 2025 and sell it today you would earn a total of  6,808  from holding Cloudflare or generate 47.82% return on investment over 90 days.

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

Confluent  vs.  Cloudflare

Confluent

Risk-Adjusted Performance

Weakest

Over the last 90 days Confluent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cloudflare

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudflare are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Cloudflare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Confluent and Cloudflare

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

The idea behind Confluent and Cloudflare 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.