Correlation Between Datadog and Capital Clean

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

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

Diversification Opportunities for Datadog and Capital Clean

0.7

Correlation Coefficient

Datadog  Capital Clean

Poor diversification

The 3 months correlation between Datadog and Capital is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Datadog and Capital Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Clean Energy 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 Capital Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Clean Energy has no effect on the direction of Datadog i.e., Datadog and Capital Clean go up and down completely randomly.

Pair Corralation between Datadog and Capital Clean

Given the investment horizon of 90 days Datadog is expected to generate 1.16 times more return on investment than Capital Clean. However, Datadog is 1.16 times more volatile than Capital Clean Energy. It trades about 0.15 of its potential returns per unit of risk. Capital Clean Energy is currently generating about 0.09 per unit of risk. If you would invest  10,788  in Datadog on May 9, 2025 and sell it today you would earn a total of  2,850  from holding Datadog or generate 26.42% return on investment over 90 days.

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

Datadog  vs.  Capital Clean Energy

Datadog

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 11 (%) 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.

Capital Clean Energy

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Clean Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Capital Clean exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Datadog and Capital Clean

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

The idea behind Datadog and Capital Clean Energy 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.