Correlation Between Cloudflare and Consensus Cloud

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

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

Diversification Opportunities for Cloudflare and Consensus Cloud

0.69

Correlation Coefficient

Cloudflare  Consensus Cloud

Poor diversification

The 3 months correlation between Cloudflare and Consensus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and Consensus Cloud Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consensus Cloud Solutions 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 Consensus Cloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consensus Cloud Solutions has no effect on the direction of Cloudflare i.e., Cloudflare and Consensus Cloud go up and down completely randomly.

Pair Corralation between Cloudflare and Consensus Cloud

Considering the 90-day investment horizon Cloudflare is expected to generate 0.93 times more return on investment than Consensus Cloud. However, Cloudflare is 1.08 times less risky than Consensus Cloud. It trades about 0.42 of its potential returns per unit of risk. Consensus Cloud Solutions is currently generating about 0.1 per unit of risk. If you would invest  10,681  in Cloudflare on April 22, 2025 and sell it today you would earn a total of  9,095  from holding Cloudflare or generate 85.15% return on investment over 90 days.

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

Cloudflare  vs.  Consensus Cloud Solutions

Cloudflare

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudflare are ranked lower than 33 (%) 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.

Consensus Cloud Solutions

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Consensus Cloud Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Consensus Cloud demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cloudflare and Consensus Cloud

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

The idea behind Cloudflare and Consensus Cloud Solutions 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.