Correlation Between Fastly and PagerDuty

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

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

Diversification Opportunities for Fastly and PagerDuty

0.64

Correlation Coefficient

Fastly  PagerDuty

Poor diversification

The 3 months correlation between Fastly and PagerDuty is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fastly Inc and PagerDuty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PagerDuty and Fastly 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 Fastly Inc are associated (or correlated) with PagerDuty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PagerDuty has no effect on the direction of Fastly i.e., Fastly and PagerDuty go up and down completely randomly.

Pair Corralation between Fastly and PagerDuty

Assuming the 90 days trading horizon Fastly Inc is expected to generate 2.29 times more return on investment than PagerDuty. However, Fastly is 2.29 times more volatile than PagerDuty. It trades about 0.22 of its potential returns per unit of risk. PagerDuty is currently generating about -0.11 per unit of risk. If you would invest  755.00  in Fastly Inc on September 23, 2024 and sell it today you would earn a total of  172.00  from holding Fastly Inc or generate 22.78% return on investment over 90 days.

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

Fastly Inc  vs.  PagerDuty

Fastly Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fastly Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fastly unveiled solid returns over the last few months and may actually be approaching a breakup point.

PagerDuty

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PagerDuty are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PagerDuty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fastly and PagerDuty

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

The idea behind Fastly Inc and PagerDuty 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 Global Correlations module to find global opportunities by holding instruments from different markets.