Correlation Between Datadog and Xponential Fitness
Can any of the company-specific risk be diversified away by investing in both Datadog and Xponential Fitness 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 Datadog and Xponential Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datadog and Xponential Fitness, you can compare the effects of market volatilities on Datadog and Xponential Fitness 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 Datadog with a short position of Xponential Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datadog and Xponential Fitness.
Diversification Opportunities for Datadog and Xponential Fitness
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Datadog and Xponential is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Datadog and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness and Datadog 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 Datadog are associated (or correlated) with Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of Datadog i.e., Datadog and Xponential Fitness go up and down completely randomly.
Pair Corralation between Datadog and Xponential Fitness
Given the investment horizon of 90 days Datadog is expected to generate 1.11 times less return on investment than Xponential Fitness. But when comparing it to its historical volatility, Datadog is 2.31 times less risky than Xponential Fitness. It trades about 0.35 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,241 in Xponential Fitness on September 2, 2024 and sell it today you would earn a total of 283.00 from holding Xponential Fitness or generate 22.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Datadog vs. Xponential Fitness
Performance |
| Timeline |
| Datadog |
| Xponential Fitness |
Datadog and Xponential Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Datadog and Xponential Fitness
The main advantage of trading using opposite Datadog and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datadog position performs unexpectedly, Xponential Fitness 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 Xponential Fitness will offset losses from the drop in Xponential Fitness' long position.The idea behind Datadog and Xponential Fitness 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |