Correlation Between Cloudflare and Gitlab

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

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

Diversification Opportunities for Cloudflare and Gitlab

-0.47

Correlation Coefficient

Cloudflare  Gitlab

Very good diversification

The 3 months correlation between Cloudflare and Gitlab is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and Gitlab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gitlab Inc 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 Gitlab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gitlab Inc has no effect on the direction of Cloudflare i.e., Cloudflare and Gitlab go up and down completely randomly.

Pair Corralation between Cloudflare and Gitlab

Considering the 90-day investment horizon Cloudflare is expected to generate 0.79 times more return on investment than Gitlab. However, Cloudflare is 1.26 times less risky than Gitlab. It trades about 0.35 of its potential returns per unit of risk. Gitlab Inc is currently generating about -0.05 per unit of risk. If you would invest  13,234  in Cloudflare on May 9, 2025 and sell it today you would earn a total of  8,319  from holding Cloudflare or generate 62.86% return on investment over 90 days.

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

Cloudflare  vs.  Gitlab Inc

Cloudflare

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudflare are ranked lower than 27 (%) 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.

Gitlab Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days Gitlab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Cloudflare and Gitlab

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

The idea behind Cloudflare and Gitlab Inc 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.