Correlation Between Cloudflare and F5 Networks

Can any of the company-specific risk be diversified away by investing in both Cloudflare and F5 Networks 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 F5 Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cloudflare and F5 Networks, you can compare the effects of market volatilities on Cloudflare and F5 Networks 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 F5 Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloudflare and F5 Networks.

Diversification Opportunities for Cloudflare and F5 Networks

0.56

Correlation Coefficient

Cloudflare  F5 Networks

Very weak diversification

The 3 months correlation between Cloudflare and FFIV is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and F5 Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F5 Networks 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 F5 Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F5 Networks has no effect on the direction of Cloudflare i.e., Cloudflare and F5 Networks go up and down completely randomly.

Pair Corralation between Cloudflare and F5 Networks

Considering the 90-day investment horizon Cloudflare is expected to generate 2.71 times more return on investment than F5 Networks. However, Cloudflare is 2.71 times more volatile than F5 Networks. It trades about 0.02 of its potential returns per unit of risk. F5 Networks is currently generating about 0.0 per unit of risk. If you would invest  7,780  in Cloudflare on February 7, 2024 and sell it today you would lose (350.00) from holding Cloudflare or give up 4.5% of portfolio value over 90 days.

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

Cloudflare  vs.  F5 Networks

Cloudflare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cloudflare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

F5 Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days F5 Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Cloudflare and F5 Networks

The main advantage of trading using opposite Cloudflare and F5 Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloudflare position performs unexpectedly, F5 Networks 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 F5 Networks will offset losses from the drop in F5 Networks' long position.

The idea behind Cloudflare and F5 Networks 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.