Correlation Between Cloudflare and TE Connectivity

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

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

Diversification Opportunities for Cloudflare and TE Connectivity

0.74

Correlation Coefficient

Cloudflare  TE Connectivity

Poor diversification

The 3 months correlation between Cloudflare and TEL is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and TE Connectivity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TE Connectivity 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 TE Connectivity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TE Connectivity has no effect on the direction of Cloudflare i.e., Cloudflare and TE Connectivity go up and down completely randomly.

Pair Corralation between Cloudflare and TE Connectivity

Considering the 90-day investment horizon Cloudflare is expected to generate 1.64 times less return on investment than TE Connectivity. In addition to that, Cloudflare is 2.57 times more volatile than TE Connectivity. It trades about 0.07 of its total potential returns per unit of risk. TE Connectivity is currently generating about 0.3 per unit of volatility. If you would invest  19,921  in TE Connectivity on August 7, 2025 and sell it today you would earn a total of  4,434  from holding TE Connectivity or generate 22.26% return on investment over 90 days.

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

Cloudflare  vs.  TE Connectivity

Cloudflare

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudflare are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Cloudflare may actually be approaching a critical reversion point that can send shares even higher in December 2025.

TE Connectivity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TE Connectivity are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, TE Connectivity disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cloudflare and TE Connectivity

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

The idea behind Cloudflare and TE Connectivity 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.