Correlation Between Fastly and Starguide

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

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

Diversification Opportunities for Fastly and Starguide

-0.33

Correlation Coefficient

Fastly  Starguide

Very good diversification

The 3 months correlation between Fastly and Starguide is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fastly Inc and Starguide Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starguide Group 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 Starguide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starguide Group has no effect on the direction of Fastly i.e., Fastly and Starguide go up and down completely randomly.

Pair Corralation between Fastly and Starguide

Given the investment horizon of 90 days Fastly is expected to generate 30.93 times less return on investment than Starguide. But when comparing it to its historical volatility, Fastly Inc is 11.51 times less risky than Starguide. It trades about 0.03 of its potential returns per unit of risk. Starguide Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  400.00  in Starguide Group on October 9, 2024 and sell it today you would lose (399.36) from holding Starguide Group or give up 99.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Fastly Inc  vs.  Starguide Group

Fastly Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fastly Inc are ranked lower than 9 (%) 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.

Starguide Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Starguide Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Starguide reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fastly and Starguide

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

The idea behind Fastly Inc and Starguide Group 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.