Correlation Between Cloudflare and MegaShort NASDAQ

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

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

Diversification Opportunities for Cloudflare and MegaShort NASDAQ

0.01

Correlation Coefficient

Cloudflare  MegaShort NASDAQ

Significant diversification

The 3 months correlation between Cloudflare and MegaShort is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and MegaShort NASDAQ 100 Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MegaShort NASDAQ 100 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 MegaShort NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MegaShort NASDAQ 100 has no effect on the direction of Cloudflare i.e., Cloudflare and MegaShort NASDAQ go up and down completely randomly.

Pair Corralation between Cloudflare and MegaShort NASDAQ

Considering the 90-day investment horizon Cloudflare is expected to generate 1.3 times more return on investment than MegaShort NASDAQ. However, Cloudflare is 1.3 times more volatile than MegaShort NASDAQ 100 Daily. It trades about 0.16 of its potential returns per unit of risk. MegaShort NASDAQ 100 Daily is currently generating about -0.13 per unit of risk. If you would invest  19,349  in Cloudflare on May 10, 2025 and sell it today you would earn a total of  1,695  from holding Cloudflare or generate 8.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Cloudflare  vs.  MegaShort NASDAQ 100 Daily

Cloudflare

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudflare are ranked lower than 23 (%) 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.

MegaShort NASDAQ 100

Risk-Adjusted Performance

Weakest

Over the last 90 days MegaShort NASDAQ 100 Daily has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Cloudflare and MegaShort NASDAQ

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

The idea behind Cloudflare and MegaShort NASDAQ 100 Daily 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.