Correlation Between Elevance Health, and Datadog,

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

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

Diversification Opportunities for Elevance Health, and Datadog,

0.83

Correlation Coefficient

Elevance Health,  Datadog,

Very poor diversification

The 3 months correlation between Elevance and Datadog, is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Elevance Health, and Datadog, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog, and Elevance Health, 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 Elevance Health, 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 Elevance Health, i.e., Elevance Health, and Datadog, go up and down completely randomly.

Pair Corralation between Elevance Health, and Datadog,

Assuming the 90 days trading horizon Elevance Health, is expected to generate 0.55 times more return on investment than Datadog,. However, Elevance Health, is 1.83 times less risky than Datadog,. It trades about -0.09 of its potential returns per unit of risk. Datadog, is currently generating about -0.25 per unit of risk. If you would invest  47,095  in Elevance Health, on December 26, 2024 and sell it today you would lose (3,355) from holding Elevance Health, or give up 7.12% of portfolio value over 90 days.

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

Elevance Health,  vs.  Datadog,

Elevance Health,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elevance Health, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Datadog,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Datadog, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Elevance Health, and Datadog,

The main advantage of trading using opposite Elevance Health, and Datadog, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elevance Health, 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 Elevance Health, 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.