Correlation Between MicroStrategy Incorporated and Cloudflare

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

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

Diversification Opportunities for MicroStrategy Incorporated and Cloudflare

-0.46

Correlation Coefficient

MicroStrategy Incorporated  Cloudflare

Very good diversification

The 3 months correlation between MicroStrategy and Cloudflare is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding MicroStrategy Incorporated and Cloudflare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudflare and MicroStrategy Incorporated 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 MicroStrategy Incorporated 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 MicroStrategy Incorporated i.e., MicroStrategy Incorporated and Cloudflare go up and down completely randomly.

Pair Corralation between MicroStrategy Incorporated and Cloudflare

Given the investment horizon of 90 days MicroStrategy Incorporated is expected to under-perform the Cloudflare. In addition to that, MicroStrategy Incorporated is 1.82 times more volatile than Cloudflare. It trades about -0.24 of its total potential returns per unit of risk. Cloudflare is currently generating about 0.08 per unit of volatility. If you would invest  21,459  in Cloudflare on August 1, 2025 and sell it today you would earn a total of  791.00  from holding Cloudflare or generate 3.69% return on investment over 90 days.

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

MicroStrategy Incorporated  vs.  Cloudflare

MicroStrategy Incorporated

Risk-Adjusted Performance

Weakest

Over the last 90 days MicroStrategy Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in November 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Cloudflare

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudflare are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Cloudflare may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with MicroStrategy Incorporated and Cloudflare

The main advantage of trading using opposite MicroStrategy Incorporated and Cloudflare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroStrategy Incorporated 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 MicroStrategy Incorporated 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.