Correlation Between Datadog and Eagle Materials

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

By analyzing existing cross correlation between Datadog and Eagle Materials, you can compare the effects of market volatilities on Datadog and Eagle Materials 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 Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datadog and Eagle Materials.

Diversification Opportunities for Datadog and Eagle Materials

-0.39

Correlation Coefficient

Datadog  Eagle Materials

Very good diversification

The 3 months correlation between Datadog and Eagle is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Datadog and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials 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 Eagle Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Materials has no effect on the direction of Datadog i.e., Datadog and Eagle Materials go up and down completely randomly.

Pair Corralation between Datadog and Eagle Materials

Assuming the 90 days horizon Datadog is expected to generate 1.3 times more return on investment than Eagle Materials. However, Datadog is 1.3 times more volatile than Eagle Materials. It trades about 0.24 of its potential returns per unit of risk. Eagle Materials is currently generating about 0.0 per unit of risk. If you would invest  7,721  in Datadog on April 21, 2025 and sell it today you would earn a total of  4,593  from holding Datadog or generate 59.49% return on investment over 90 days.

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

Datadog  vs.  Eagle Materials

Datadog

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 18 (%) 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.

Eagle Materials

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Datadog and Eagle Materials

The main advantage of trading using opposite Datadog and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datadog position performs unexpectedly, Eagle Materials 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 Eagle Materials will offset losses from the drop in Eagle Materials' long position.

The idea behind Datadog and Eagle Materials 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.

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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 Stocks Directory module to find actively traded stocks across global markets.