Correlation Between Triton International and Datadog

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

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

Diversification Opportunities for Triton International and Datadog

0.24

Correlation Coefficient

Triton International  Datadog

Modest diversification

The 3 months correlation between Triton and Datadog is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited and Datadog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog and Triton International 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 Triton International Limited 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 Triton International i.e., Triton International and Datadog go up and down completely randomly.

Pair Corralation between Triton International and Datadog

Assuming the 90 days trading horizon Triton International Limited is expected to generate 0.17 times more return on investment than Datadog. However, Triton International Limited is 6.04 times less risky than Datadog. It trades about -0.1 of its potential returns per unit of risk. Datadog is currently generating about -0.07 per unit of risk. If you would invest  2,469  in Triton International Limited on September 24, 2024 and sell it today you would lose (22.00) from holding Triton International Limited or give up 0.89% of portfolio value over 90 days.

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

Triton International Limited  vs.  Datadog

Triton International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Datadog

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 12 (%) 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.

Pair Trading with Triton International and Datadog

The main advantage of trading using opposite Triton International and Datadog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triton International 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 Triton International Limited 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.