Correlation Between Cloudflare and Yext

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

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

Diversification Opportunities for Cloudflare and Yext

0.55

Correlation Coefficient

Cloudflare  Yext

Very weak diversification

The 3 months correlation between Cloudflare and Yext is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and Yext Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yext 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 Yext. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yext Inc has no effect on the direction of Cloudflare i.e., Cloudflare and Yext go up and down completely randomly.

Pair Corralation between Cloudflare and Yext

Considering the 90-day investment horizon Cloudflare is expected to generate 1.88 times more return on investment than Yext. However, Cloudflare is 1.88 times more volatile than Yext Inc. It trades about 0.05 of its potential returns per unit of risk. Yext Inc is currently generating about 0.01 per unit of risk. If you would invest  10,903  in Cloudflare on December 29, 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	Weak
Accuracy	100.0%
Values	Daily Returns

Cloudflare  vs.  Yext 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.

Yext Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yext Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Yext is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cloudflare and Yext

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

The idea behind Cloudflare and Yext 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 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.