Correlation Between Salesforce and EJF Investments

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

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

Diversification Opportunities for Salesforce and EJF Investments

0.14

Correlation Coefficient

Salesforce  EJF Investments

Average diversification

The 3 months correlation between Salesforce and EJF is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and EJF Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EJF Investments 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 EJF Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EJF Investments has no effect on the direction of Salesforce i.e., Salesforce and EJF Investments go up and down completely randomly.

Pair Corralation between Salesforce and EJF Investments

Considering the 90-day investment horizon Salesforce is expected to generate 2.45 times more return on investment than EJF Investments. However, Salesforce is 2.45 times more volatile than EJF Investments. It trades about 0.12 of its potential returns per unit of risk. EJF Investments is currently generating about 0.22 per unit of risk. If you would invest  28,643  in Salesforce on October 24, 2024 and sell it today you would earn a total of  4,619  from holding Salesforce or generate 16.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Salesforce  vs.  EJF Investments

Salesforce

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 9 (%) 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.

EJF Investments

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EJF Investments are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EJF Investments unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and EJF Investments

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

The idea behind Salesforce and EJF Investments 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.