Correlation Between Cloudflare and Fidelity Freedom

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

By analyzing existing cross correlation between Cloudflare and Fidelity Freedom 2040, you can compare the effects of market volatilities on Cloudflare and Fidelity Freedom 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 Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloudflare and Fidelity Freedom.

Diversification Opportunities for Cloudflare and Fidelity Freedom

0.92

Correlation Coefficient

Cloudflare  Fidelity Freedom

Almost no diversification

The 3 months correlation between Cloudflare and Fidelity is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and Fidelity Freedom 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2040 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 Fidelity Freedom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Freedom 2040 has no effect on the direction of Cloudflare i.e., Cloudflare and Fidelity Freedom go up and down completely randomly.

Pair Corralation between Cloudflare and Fidelity Freedom

Considering the 90-day investment horizon Cloudflare is expected to generate 4.15 times more return on investment than Fidelity Freedom. However, Cloudflare is 4.15 times more volatile than Fidelity Freedom 2040. It trades about 0.21 of its potential returns per unit of risk. Fidelity Freedom 2040 is currently generating about 0.25 per unit of risk. If you would invest  15,280  in Cloudflare on May 15, 2025 and sell it today you would earn a total of  4,654  from holding Cloudflare or generate 30.46% return on investment over 90 days.

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

Cloudflare  vs.  Fidelity Freedom 2040

Cloudflare

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudflare are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Cloudflare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Freedom 2040

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Freedom 2040 are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Freedom may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Cloudflare and Fidelity Freedom

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

The idea behind Cloudflare and Fidelity Freedom 2040 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.