Correlation Between Datadog and Eldorado Gold

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

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

Diversification Opportunities for Datadog and Eldorado Gold

-0.47

Correlation Coefficient

Datadog  Eldorado Gold

Very good diversification

The 3 months correlation between Datadog and Eldorado is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Datadog and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold Corp 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 Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of Datadog i.e., Datadog and Eldorado Gold go up and down completely randomly.

Pair Corralation between Datadog and Eldorado Gold

Given the investment horizon of 90 days Datadog is expected to generate 1.27 times more return on investment than Eldorado Gold. However, Datadog is 1.27 times more volatile than Eldorado Gold Corp. It trades about 0.06 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about 0.06 per unit of risk. If you would invest  7,105  in Datadog on October 11, 2024 and sell it today you would earn a total of  7,083  from holding Datadog or generate 99.69% return on investment over 90 days.

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

Datadog  vs.  Eldorado Gold Corp

Datadog

Risk-Adjusted Performance

5 of 100

Modest

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

Eldorado Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eldorado Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Datadog and Eldorado Gold

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

The idea behind Datadog and Eldorado Gold Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.