Correlation Between Stagwell and Datadog

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

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

Diversification Opportunities for Stagwell and Datadog

-0.2

Correlation Coefficient

Stagwell  Datadog

Good diversification

The 3 months correlation between Stagwell and Datadog is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and Datadog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog and Stagwell 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 Stagwell are associated (or correlated) with Datadog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datadog has no effect on the direction of Stagwell i.e., Stagwell and Datadog go up and down completely randomly.

Pair Corralation between Stagwell and Datadog

Given the investment horizon of 90 days Stagwell is expected to generate 1.07 times more return on investment than Datadog. However, Stagwell is 1.07 times more volatile than Datadog. It trades about 0.29 of its potential returns per unit of risk. Datadog is currently generating about 0.01 per unit of risk. If you would invest  564.00  in Stagwell on February 21, 2024 and sell it today you would earn a total of  134.00  from holding Stagwell or generate 23.76% return on investment over 90 days.

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

Stagwell  vs.  Datadog

Stagwell

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stagwell are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Stagwell may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Datadog

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Datadog has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Datadog is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Stagwell and Datadog

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

The idea behind Stagwell and Datadog 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.