Correlation Between Elastic NV and Pagerduty

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

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

Diversification Opportunities for Elastic NV and Pagerduty

0.48

Correlation Coefficient

Elastic NV  Pagerduty

Very weak diversification

The 3 months correlation between Elastic and Pagerduty is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Elastic NV and Pagerduty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pagerduty and Elastic NV 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 Elastic NV 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 Elastic NV i.e., Elastic NV and Pagerduty go up and down completely randomly.

Pair Corralation between Elastic NV and Pagerduty

Given the investment horizon of 90 days Elastic NV is expected to under-perform the Pagerduty. In addition to that, Elastic NV is 1.31 times more volatile than Pagerduty. It trades about -0.01 of its total potential returns per unit of risk. Pagerduty is currently generating about 0.04 per unit of volatility. If you would invest  1,800  in Pagerduty on December 29, 2024 and sell it today you would earn a total of  77.00  from holding Pagerduty or generate 4.28% return on investment over 90 days.

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

Elastic NV  vs.  Pagerduty

Elastic NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elastic NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Elastic NV is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pagerduty

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pagerduty are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Pagerduty may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Elastic NV and Pagerduty

The main advantage of trading using opposite Elastic NV and Pagerduty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elastic NV 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 Elastic NV 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.