Correlation Between Salesforce and Generation Mining

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

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

Diversification Opportunities for Salesforce and Generation Mining

-0.57

Correlation Coefficient

Salesforce  Generation Mining

Excellent diversification

The 3 months correlation between Salesforce and Generation is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Generation Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generation Mining 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 Generation Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generation Mining has no effect on the direction of Salesforce i.e., Salesforce and Generation Mining go up and down completely randomly.

Pair Corralation between Salesforce and Generation Mining

Considering the 90-day investment horizon Salesforce is expected to generate 0.36 times more return on investment than Generation Mining. However, Salesforce is 2.78 times less risky than Generation Mining. It trades about 0.09 of its potential returns per unit of risk. Generation Mining is currently generating about -0.03 per unit of risk. If you would invest  14,464  in Salesforce on October 9, 2024 and sell it today you would earn a total of  18,589  from holding Salesforce or generate 128.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Salesforce  vs.  Generation Mining

Salesforce

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 8 (%) 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.

Generation Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generation Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Salesforce and Generation Mining

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

The idea behind Salesforce and Generation Mining 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.