Correlation Between Salesforce and American Manganese

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

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

Diversification Opportunities for Salesforce and American Manganese

-0.25

Correlation Coefficient

Salesforce  American Manganese

Very good diversification

The 3 months correlation between Salesforce and American is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and American Manganese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Manganese 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 American Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Manganese has no effect on the direction of Salesforce i.e., Salesforce and American Manganese go up and down completely randomly.

Pair Corralation between Salesforce and American Manganese

Considering the 90-day investment horizon Salesforce is expected to generate 3.76 times less return on investment than American Manganese. But when comparing it to its historical volatility, Salesforce is 3.64 times less risky than American Manganese. It trades about 0.28 of its potential returns per unit of risk. American Manganese is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  9.00  in American Manganese on September 1, 2024 and sell it today you would earn a total of  5.00  from holding American Manganese or generate 55.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Salesforce  vs.  American Manganese

Salesforce

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

American Manganese

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Manganese are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, American Manganese may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Salesforce and American Manganese

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

The idea behind Salesforce and American Manganese 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.