Correlation Between Datadog and ON SEMICONDUCTOR

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

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

Diversification Opportunities for Datadog and ON SEMICONDUCTOR

0.89

Correlation Coefficient

Datadog  ON SEMICONDUCTOR

Very poor diversification

The 3 months correlation between Datadog and XS4 is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Datadog and ON SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON SEMICONDUCTOR 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 ON SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON SEMICONDUCTOR has no effect on the direction of Datadog i.e., Datadog and ON SEMICONDUCTOR go up and down completely randomly.

Pair Corralation between Datadog and ON SEMICONDUCTOR

Assuming the 90 days horizon Datadog is expected to generate 1.11 times less return on investment than ON SEMICONDUCTOR. In addition to that, Datadog is 1.04 times more volatile than ON SEMICONDUCTOR. It trades about 0.24 of its total potential returns per unit of risk. ON SEMICONDUCTOR is currently generating about 0.28 per unit of volatility. If you would invest  3,097  in ON SEMICONDUCTOR on April 20, 2025 and sell it today you would earn a total of  2,125  from holding ON SEMICONDUCTOR or generate 68.61% return on investment over 90 days.

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

Datadog  vs.  ON SEMICONDUCTOR

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.

ON SEMICONDUCTOR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ON SEMICONDUCTOR are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ON SEMICONDUCTOR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Datadog and ON SEMICONDUCTOR

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

The idea behind Datadog and ON SEMICONDUCTOR 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.