Correlation Between SALESFORCE INC and SWISS WATER

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

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

Diversification Opportunities for SALESFORCE INC and SWISS WATER

-0.56

Correlation Coefficient

SALESFORCE INC  SWISS WATER

Excellent diversification

The 3 months correlation between SALESFORCE and SWISS is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding SALESFORCE INC CDR and SWISS WATER DECAFFCOFFEE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISS WATER DECAFFCOFFEE and SALESFORCE INC 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 SALESFORCE INC CDR are associated (or correlated) with SWISS WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISS WATER DECAFFCOFFEE has no effect on the direction of SALESFORCE INC i.e., SALESFORCE INC and SWISS WATER go up and down completely randomly.

Pair Corralation between SALESFORCE INC and SWISS WATER

Assuming the 90 days trading horizon SALESFORCE INC CDR is expected to generate 0.33 times more return on investment than SWISS WATER. However, SALESFORCE INC CDR is 3.05 times less risky than SWISS WATER. It trades about 0.16 of its potential returns per unit of risk. SWISS WATER DECAFFCOFFEE is currently generating about -0.03 per unit of risk. If you would invest  1,470  in SALESFORCE INC CDR on February 21, 2024 and sell it today you would earn a total of  50.00  from holding SALESFORCE INC CDR or generate 3.4% return on investment over 90 days.

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

SALESFORCE INC CDR  vs.  SWISS WATER DECAFFCOFFEE

SALESFORCE INC CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SALESFORCE INC CDR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SALESFORCE INC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

SWISS WATER DECAFFCOFFEE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SWISS WATER DECAFFCOFFEE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SWISS WATER reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SALESFORCE INC and SWISS WATER

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

The idea behind SALESFORCE INC CDR and SWISS WATER DECAFFCOFFEE 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.