Correlation Between Cellebrite and Confluent

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

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

Diversification Opportunities for Cellebrite and Confluent

0.9

Correlation Coefficient

Cellebrite  Confluent

Almost no diversification

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

Pair Corralation between Cellebrite and Confluent

Given the investment horizon of 90 days Cellebrite is expected to generate 2.66 times less return on investment than Confluent. But when comparing it to its historical volatility, Cellebrite DI is 1.49 times less risky than Confluent. It trades about 0.13 of its potential returns per unit of risk. Confluent is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,032  in Confluent on September 18, 2024 and sell it today you would earn a total of  1,115  from holding Confluent or generate 54.87% return on investment over 90 days.

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

Cellebrite DI  vs.  Confluent

Cellebrite DI

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cellebrite DI are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Cellebrite unveiled solid returns over the last few months and may actually be approaching a breakup point.

Confluent

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Confluent are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Confluent unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cellebrite and Confluent

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

The idea behind Cellebrite DI and Confluent 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.