Correlation Between Consensus Cloud and Couchbase

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

By analyzing existing cross correlation between Consensus Cloud Solutions and Couchbase, you can compare the effects of market volatilities on Consensus Cloud and Couchbase 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 Consensus Cloud with a short position of Couchbase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consensus Cloud and Couchbase.

Diversification Opportunities for Consensus Cloud and Couchbase

0.6

Correlation Coefficient

Consensus Cloud  Couchbase

Poor diversification

The 3 months correlation between Consensus and Couchbase is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Consensus Cloud Solutions and Couchbase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Couchbase and Consensus Cloud 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 Consensus Cloud Solutions are associated (or correlated) with Couchbase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Couchbase has no effect on the direction of Consensus Cloud i.e., Consensus Cloud and Couchbase go up and down completely randomly.

Pair Corralation between Consensus Cloud and Couchbase

Given the investment horizon of 90 days Consensus Cloud is expected to generate 1.22 times less return on investment than Couchbase. But when comparing it to its historical volatility, Consensus Cloud Solutions is 1.09 times less risky than Couchbase. It trades about 0.05 of its potential returns per unit of risk. Couchbase is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,897  in Couchbase on September 3, 2024 and sell it today you would earn a total of  154.00  from holding Couchbase or generate 8.12% return on investment over 90 days.

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

Consensus Cloud Solutions  vs.  Couchbase

Consensus Cloud Solutions

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Consensus Cloud Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Consensus Cloud may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Couchbase

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Couchbase are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Couchbase may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Consensus Cloud and Couchbase

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

The idea behind Consensus Cloud Solutions and Couchbase 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.