Correlation Between Caseys General and Datadog

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

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

Diversification Opportunities for Caseys General and Datadog

0.65

Correlation Coefficient

Caseys General  Datadog

Poor diversification

The 3 months correlation between Caseys and Datadog is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Datadog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog and Caseys General 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 Caseys General Stores 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 Caseys General i.e., Caseys General and Datadog go up and down completely randomly.

Pair Corralation between Caseys General and Datadog

Assuming the 90 days trading horizon Caseys General is expected to generate 3.66 times less return on investment than Datadog. But when comparing it to its historical volatility, Caseys General Stores is 1.32 times less risky than Datadog. It trades about 0.09 of its potential returns per unit of risk. Datadog is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  7,721  in Datadog on April 20, 2025 and sell it today you would earn a total of  4,601  from holding Datadog or generate 59.59% return on investment over 90 days.

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

Caseys General Stores  vs.  Datadog

Caseys General Stores

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Caseys General unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Caseys General and Datadog

The main advantage of trading using opposite Caseys General and Datadog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General 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 Caseys General Stores 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.