Correlation Between Workiva and Datadog

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

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

Diversification Opportunities for Workiva and Datadog

0.04

Correlation Coefficient

Workiva  Datadog

Significant diversification

The 3 months correlation between Workiva and Datadog is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Workiva and Datadog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog and Workiva 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 Workiva 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 Workiva i.e., Workiva and Datadog go up and down completely randomly.

Pair Corralation between Workiva and Datadog

Allowing for the 90-day total investment horizon Workiva is expected to generate 1.62 times more return on investment than Datadog. However, Workiva is 1.62 times more volatile than Datadog. It trades about 0.07 of its potential returns per unit of risk. Datadog is currently generating about 0.08 per unit of risk. If you would invest  6,752  in Workiva on May 22, 2025 and sell it today you would earn a total of  957.00  from holding Workiva or generate 14.17% return on investment over 90 days.

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

Workiva  vs.  Datadog

Workiva

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Workiva are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile forward-looking signals, Workiva disclosed solid returns over the last few months and may actually be approaching a breakup point.

Datadog

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Datadog are ranked lower than 6 (%) 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.

Pair Trading with Workiva and Datadog

The main advantage of trading using opposite Workiva and Datadog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workiva 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 Workiva 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.