Correlation Between Cloudflare and Nuvei Corp

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

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

Diversification Opportunities for Cloudflare and Nuvei Corp

0.83

Correlation Coefficient

Cloudflare  Nuvei Corp

Very poor diversification

The 3 months correlation between Cloudflare and Nuvei is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and Nuvei Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvei Corp 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 Nuvei Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvei Corp has no effect on the direction of Cloudflare i.e., Cloudflare and Nuvei Corp go up and down completely randomly.

Pair Corralation between Cloudflare and Nuvei Corp

If you would invest  9,637  in Cloudflare on September 20, 2024 and sell it today you would earn a total of  1,221  from holding Cloudflare or generate 12.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.55%
Values	Daily Returns

Cloudflare  vs.  Nuvei Corp

Cloudflare

Risk-Adjusted Performance

12 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudflare are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Cloudflare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nuvei Corp

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Nuvei Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Nuvei Corp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Cloudflare and Nuvei Corp

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

The idea behind Cloudflare and Nuvei Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.