Correlation Between SIMON and Datadog

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

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

Diversification Opportunities for SIMON and Datadog

0.38

Correlation Coefficient

SIMON  Datadog

Weak diversification

The 3 months correlation between SIMON and Datadog is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding SIMON PROPERTY GROUP and Datadog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog and SIMON 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 SIMON PROPERTY GROUP 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 SIMON i.e., SIMON and Datadog go up and down completely randomly.

Pair Corralation between SIMON and Datadog

Assuming the 90 days trading horizon SIMON PROPERTY GROUP is expected to under-perform the Datadog. But the bond apears to be less risky and, when comparing its historical volatility, SIMON PROPERTY GROUP is 2.64 times less risky than Datadog. The bond trades about -0.13 of its potential returns per unit of risk. The Datadog is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  12,389  in Datadog on October 24, 2024 and sell it today you would earn a total of  1,451  from holding Datadog or generate 11.71% return on investment over 90 days.

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

SIMON PROPERTY GROUP  vs.  Datadog

SIMON PROPERTY GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMON PROPERTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SIMON PROPERTY GROUP investors.

Datadog

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Datadog reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIMON and Datadog

The main advantage of trading using opposite SIMON and Datadog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMON 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 SIMON PROPERTY GROUP 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.