Correlation Between Cloudflare and Box

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

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

Diversification Opportunities for Cloudflare and Box

0.9

Correlation Coefficient

Cloudflare  Box

Almost no diversification

The 3 months correlation between Cloudflare and Box is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and Box Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Box Inc and Cloudflare 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 Cloudflare are associated (or correlated) with Box. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Box Inc has no effect on the direction of Cloudflare i.e., Cloudflare and Box go up and down completely randomly.

Pair Corralation between Cloudflare and Box

Considering the 90-day investment horizon Cloudflare is expected to generate 2.87 times more return on investment than Box. However, Cloudflare is 2.87 times more volatile than Box Inc. It trades about 0.05 of its potential returns per unit of risk. Box Inc is currently generating about -0.03 per unit of risk. If you would invest  10,903  in Cloudflare on December 28, 2024 and sell it today you would earn a total of  954.00  from holding Cloudflare or generate 8.75% return on investment over 90 days.

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

Cloudflare  vs.  Box Inc

Cloudflare

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudflare are ranked lower than 4 (%) 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.

Box Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Box Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Box is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cloudflare and Box

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

The idea behind Cloudflare and Box Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..