Correlation Between Salesforce and Resorttrust

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

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

Diversification Opportunities for Salesforce and Resorttrust

0.69

Correlation Coefficient

Salesforce  Resorttrust

Poor diversification

The 3 months correlation between Salesforce and Resorttrust is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Resorttrust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resorttrust and Salesforce 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 are associated (or correlated) with Resorttrust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resorttrust has no effect on the direction of Salesforce i.e., Salesforce and Resorttrust go up and down completely randomly.

Pair Corralation between Salesforce and Resorttrust

Considering the 90-day investment horizon Salesforce is expected to under-perform the Resorttrust. In addition to that, Salesforce is 1.12 times more volatile than Resorttrust. It trades about -0.25 of its total potential returns per unit of risk. Resorttrust is currently generating about -0.1 per unit of volatility. If you would invest  1,900  in Resorttrust on October 10, 2024 and sell it today you would lose (40.00) from holding Resorttrust or give up 2.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.71%
Values	Daily Returns

Salesforce  vs.  Resorttrust

Salesforce

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

Resorttrust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Resorttrust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Resorttrust may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Salesforce and Resorttrust

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

The idea behind Salesforce and Resorttrust 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.