Correlation Between Cloudflare and Marqeta

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

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

Diversification Opportunities for Cloudflare and Marqeta

-0.2

Correlation Coefficient

Cloudflare  Marqeta

Good diversification

The 3 months correlation between Cloudflare and Marqeta is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and Marqeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marqeta 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 Marqeta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marqeta has no effect on the direction of Cloudflare i.e., Cloudflare and Marqeta go up and down completely randomly.

Pair Corralation between Cloudflare and Marqeta

Considering the 90-day investment horizon Cloudflare is expected to generate 1.11 times less return on investment than Marqeta. In addition to that, Cloudflare is 1.09 times more volatile than Marqeta. It trades about 0.05 of its total potential returns per unit of risk. Marqeta is currently generating about 0.07 per unit of volatility. If you would invest  377.00  in Marqeta on December 29, 2024 and sell it today you would earn a total of  42.00  from holding Marqeta or generate 11.14% return on investment over 90 days.

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

Cloudflare  vs.  Marqeta

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.

Marqeta

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marqeta are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Marqeta reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cloudflare and Marqeta

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

The idea behind Cloudflare and Marqeta 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 Global Correlations module to find global opportunities by holding instruments from different markets.