Correlation Between Datadog and FEMALE HEALTH

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

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

Diversification Opportunities for Datadog and FEMALE HEALTH

-0.31

Correlation Coefficient

Datadog  FEMALE HEALTH

Very good diversification

The 3 months correlation between Datadog and FEMALE is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Datadog and FEMALE HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEMALE HEALTH and Datadog 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 Datadog are associated (or correlated) with FEMALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEMALE HEALTH has no effect on the direction of Datadog i.e., Datadog and FEMALE HEALTH go up and down completely randomly.

Pair Corralation between Datadog and FEMALE HEALTH

Assuming the 90 days horizon Datadog is expected to generate 0.65 times more return on investment than FEMALE HEALTH. However, Datadog is 1.54 times less risky than FEMALE HEALTH. It trades about 0.28 of its potential returns per unit of risk. FEMALE HEALTH is currently generating about -0.01 per unit of risk. If you would invest  9,834  in Datadog on September 13, 2024 and sell it today you would earn a total of  5,296  from holding Datadog or generate 53.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Datadog  vs.  FEMALE HEALTH

Datadog

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Datadog reported solid returns over the last few months and may actually be approaching a breakup point.

FEMALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEMALE HEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, FEMALE HEALTH is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Datadog and FEMALE HEALTH

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

The idea behind Datadog and FEMALE HEALTH 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.