Correlation Between Datadog and Crowdstrike Holdings

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

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

Diversification Opportunities for Datadog and Crowdstrike Holdings

0.48

Correlation Coefficient

Datadog  Crowdstrike Holdings

Very weak diversification

The 3 months correlation between Datadog and Crowdstrike is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Datadog and Crowdstrike Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crowdstrike Holdings 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 Crowdstrike Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crowdstrike Holdings has no effect on the direction of Datadog i.e., Datadog and Crowdstrike Holdings go up and down completely randomly.

Pair Corralation between Datadog and Crowdstrike Holdings

Given the investment horizon of 90 days Datadog is expected to generate 1.33 times more return on investment than Crowdstrike Holdings. However, Datadog is 1.33 times more volatile than Crowdstrike Holdings. It trades about 0.06 of its potential returns per unit of risk. Crowdstrike Holdings is currently generating about -0.01 per unit of risk. If you would invest  11,909  in Datadog on May 14, 2025 and sell it today you would earn a total of  974.00  from holding Datadog or generate 8.18% return on investment over 90 days.

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

Datadog  vs.  Crowdstrike Holdings

Datadog

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Datadog may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Crowdstrike Holdings

Risk-Adjusted Performance

Weakest

Over the last 90 days Crowdstrike Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Crowdstrike Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Datadog and Crowdstrike Holdings

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

The idea behind Datadog and Crowdstrike Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.