Correlation Between MongoDB and Cloudflare

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

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

Diversification Opportunities for MongoDB and Cloudflare

0.14

Correlation Coefficient

MongoDB  Cloudflare

Average diversification

The 3 months correlation between MongoDB and Cloudflare is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding MongoDB and Cloudflare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudflare and MongoDB 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 MongoDB are associated (or correlated) with Cloudflare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudflare has no effect on the direction of MongoDB i.e., MongoDB and Cloudflare go up and down completely randomly.

Pair Corralation between MongoDB and Cloudflare

Considering the 90-day investment horizon MongoDB is expected to under-perform the Cloudflare. But the stock apears to be less risky and, when comparing its historical volatility, MongoDB is 1.06 times less risky than Cloudflare. The stock trades about -0.09 of its potential returns per unit of risk. The Cloudflare is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  9,937  in Cloudflare on November 27, 2024 and sell it today you would earn a total of  4,377  from holding Cloudflare or generate 44.05% return on investment over 90 days.

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

MongoDB  vs.  Cloudflare

MongoDB

Risk-Adjusted Performance

Very Weak

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

Cloudflare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudflare are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, Cloudflare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MongoDB and Cloudflare

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

The idea behind MongoDB and Cloudflare 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..