Correlation Between Fastly and Pure Storage

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

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

Diversification Opportunities for Fastly and Pure Storage

0.84

Correlation Coefficient

Fastly  Pure Storage

Very poor diversification

The 3 months correlation between Fastly and Pure is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fastly Inc and Pure Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Storage and Fastly 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 Fastly Inc are associated (or correlated) with Pure Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Storage has no effect on the direction of Fastly i.e., Fastly and Pure Storage go up and down completely randomly.

Pair Corralation between Fastly and Pure Storage

Given the investment horizon of 90 days Fastly Inc is expected to generate 1.32 times more return on investment than Pure Storage. However, Fastly is 1.32 times more volatile than Pure Storage. It trades about 0.14 of its potential returns per unit of risk. Pure Storage is currently generating about 0.14 per unit of risk. If you would invest  733.00  in Fastly Inc on October 26, 2024 and sell it today you would earn a total of  311.00  from holding Fastly Inc or generate 42.43% return on investment over 90 days.

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

Fastly Inc  vs.  Pure Storage

Fastly Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fastly Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Fastly showed solid returns over the last few months and may actually be approaching a breakup point.

Pure Storage

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Storage are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Pure Storage reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fastly and Pure Storage

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

The idea behind Fastly Inc and Pure Storage 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.