Correlation Between Datadog and Fidelity National

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

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

Diversification Opportunities for Datadog and Fidelity National

-0.24

Correlation Coefficient

Datadog  Fidelity National

Very good diversification

The 3 months correlation between Datadog and Fidelity is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Datadog and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National 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 Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of Datadog i.e., Datadog and Fidelity National go up and down completely randomly.

Pair Corralation between Datadog and Fidelity National

Assuming the 90 days horizon Datadog is expected to under-perform the Fidelity National. In addition to that, Datadog is 2.52 times more volatile than Fidelity National Information. It trades about -0.22 of its total potential returns per unit of risk. Fidelity National Information is currently generating about -0.51 per unit of volatility. If you would invest  8,102  in Fidelity National Information on October 13, 2024 and sell it today you would lose (607.00) from holding Fidelity National Information or give up 7.49% of portfolio value over 90 days.

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

Datadog  vs.  Fidelity National Information

Datadog

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 7 (%) 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.

Fidelity National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity National Information has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fidelity National is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Datadog and Fidelity National

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

The idea behind Datadog and Fidelity National Information 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.