Correlation Between Cloudflare and Freedom 100

Can any of the company-specific risk be diversified away by investing in both Cloudflare and Freedom 100 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 Freedom 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cloudflare and Freedom 100 Emerging, you can compare the effects of market volatilities on Cloudflare and Freedom 100 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 Freedom 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloudflare and Freedom 100.

Diversification Opportunities for Cloudflare and Freedom 100

0.87

Correlation Coefficient

Cloudflare  Freedom 100

Very poor diversification

The 3 months correlation between Cloudflare and Freedom is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and Freedom 100 Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom 100 Emerging 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 Freedom 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom 100 Emerging has no effect on the direction of Cloudflare i.e., Cloudflare and Freedom 100 go up and down completely randomly.

Pair Corralation between Cloudflare and Freedom 100

Considering the 90-day investment horizon Cloudflare is expected to generate 2.47 times more return on investment than Freedom 100. However, Cloudflare is 2.47 times more volatile than Freedom 100 Emerging. It trades about 0.17 of its potential returns per unit of risk. Freedom 100 Emerging is currently generating about 0.19 per unit of risk. If you would invest  15,719  in Cloudflare on May 16, 2025 and sell it today you would earn a total of  3,819  from holding Cloudflare or generate 24.3% return on investment over 90 days.

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

Cloudflare  vs.  Freedom 100 Emerging

Cloudflare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudflare are ranked lower than 13 (%) 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.

Freedom 100 Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom 100 Emerging are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Freedom 100 may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Cloudflare and Freedom 100

The main advantage of trading using opposite Cloudflare and Freedom 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloudflare position performs unexpectedly, Freedom 100 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 Freedom 100 will offset losses from the drop in Freedom 100's long position.

The idea behind Cloudflare and Freedom 100 Emerging 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.