Correlation Between Vishay Precision and Datadog

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

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

Diversification Opportunities for Vishay Precision and Datadog

-0.19

Correlation Coefficient

Vishay Precision  Datadog

Good diversification

The 3 months correlation between Vishay and Datadog is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Precision Group and Datadog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog and Vishay Precision 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 Vishay Precision 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 Vishay Precision i.e., Vishay Precision and Datadog go up and down completely randomly.

Pair Corralation between Vishay Precision and Datadog

Considering the 90-day investment horizon Vishay Precision Group is expected to under-perform the Datadog. But the stock apears to be less risky and, when comparing its historical volatility, Vishay Precision Group is 1.54 times less risky than Datadog. The stock trades about -0.04 of its potential returns per unit of risk. The Datadog is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,394  in Datadog on September 19, 2024 and sell it today you would earn a total of  7,626  from holding Datadog or generate 103.14% return on investment over 90 days.

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

Vishay Precision Group  vs.  Datadog

Vishay Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vishay Precision Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vishay Precision is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Datadog

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 13 (%) 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 Vishay Precision and Datadog

The main advantage of trading using opposite Vishay Precision and Datadog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vishay Precision 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 Vishay Precision 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.