Correlation Between Fastly and Upstart Holdings

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

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

Diversification Opportunities for Fastly and Upstart Holdings

0.34

Correlation Coefficient

Fastly  Upstart Holdings

Weak diversification

The 3 months correlation between Fastly and Upstart is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fastly Inc and Upstart Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upstart Holdings 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 Upstart Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upstart Holdings has no effect on the direction of Fastly i.e., Fastly and Upstart Holdings go up and down completely randomly.

Pair Corralation between Fastly and Upstart Holdings

Given the investment horizon of 90 days Fastly Inc is expected to under-perform the Upstart Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Fastly Inc is 1.42 times less risky than Upstart Holdings. The stock trades about -0.12 of its potential returns per unit of risk. The Upstart Holdings is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  6,332  in Upstart Holdings on December 29, 2024 and sell it today you would lose (1,422) from holding Upstart Holdings or give up 22.46% of portfolio value over 90 days.

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

Fastly Inc  vs.  Upstart Holdings

Fastly Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fastly Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Upstart Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Upstart Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Fastly and Upstart Holdings

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

The idea behind Fastly Inc and Upstart Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.