Correlation Between Nomad Foods and CLOUDFLARE INC

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

By analyzing existing cross correlation between Nomad Foods and CLOUDFLARE INC A, you can compare the effects of market volatilities on Nomad Foods and CLOUDFLARE INC 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 Nomad Foods with a short position of CLOUDFLARE INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomad Foods and CLOUDFLARE INC.

Diversification Opportunities for Nomad Foods and CLOUDFLARE INC

0.22

Correlation Coefficient

Nomad Foods  CLOUDFLARE INC

Modest diversification

The 3 months correlation between Nomad and CLOUDFLARE is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods and CLOUDFLARE INC A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLOUDFLARE INC A and Nomad Foods 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 Nomad Foods are associated (or correlated) with CLOUDFLARE INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLOUDFLARE INC A has no effect on the direction of Nomad Foods i.e., Nomad Foods and CLOUDFLARE INC go up and down completely randomly.

Pair Corralation between Nomad Foods and CLOUDFLARE INC

Assuming the 90 days trading horizon Nomad Foods is expected to generate 0.5 times more return on investment than CLOUDFLARE INC. However, Nomad Foods is 1.98 times less risky than CLOUDFLARE INC. It trades about 0.11 of its potential returns per unit of risk. CLOUDFLARE INC A is currently generating about 0.04 per unit of risk. If you would invest  1,555  in Nomad Foods on December 24, 2024 and sell it today you would earn a total of  205.00  from holding Nomad Foods or generate 13.18% return on investment over 90 days.

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

Nomad Foods  vs.  CLOUDFLARE INC A

Nomad Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nomad Foods are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Nomad Foods unveiled solid returns over the last few months and may actually be approaching a breakup point.

CLOUDFLARE INC A

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CLOUDFLARE INC A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, CLOUDFLARE INC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nomad Foods and CLOUDFLARE INC

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

The idea behind Nomad Foods and CLOUDFLARE INC A 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.