Correlation Between Datadog and Bumble

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

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

Diversification Opportunities for Datadog and Bumble

0.82

Correlation Coefficient

Datadog  Bumble

Very poor diversification

The 3 months correlation between Datadog and Bumble is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Datadog and Bumble Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumble Inc 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 Bumble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumble Inc has no effect on the direction of Datadog i.e., Datadog and Bumble go up and down completely randomly.

Pair Corralation between Datadog and Bumble

Given the investment horizon of 90 days Datadog is expected to generate 0.81 times more return on investment than Bumble. However, Datadog is 1.23 times less risky than Bumble. It trades about 0.23 of its potential returns per unit of risk. Bumble Inc is currently generating about 0.17 per unit of risk. If you would invest  11,140  in Datadog on September 14, 2024 and sell it today you would earn a total of  4,533  from holding Datadog or generate 40.69% return on investment over 90 days.

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

Datadog  vs.  Bumble Inc

Datadog

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Datadog reported solid returns over the last few months and may actually be approaching a breakup point.

Bumble Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bumble Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental drivers, Bumble disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Datadog and Bumble

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

The idea behind Datadog and Bumble 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.