Correlation Between Salesforce and Hartford Municipal

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

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

Diversification Opportunities for Salesforce and Hartford Municipal

0.46

Correlation Coefficient

Salesforce  Hartford Municipal

Very weak diversification

The 3 months correlation between Salesforce and Hartford is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Hartford Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Municipal Income 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 Hartford Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Municipal Income has no effect on the direction of Salesforce i.e., Salesforce and Hartford Municipal go up and down completely randomly.

Pair Corralation between Salesforce and Hartford Municipal

Considering the 90-day investment horizon Salesforce is expected to generate 8.58 times more return on investment than Hartford Municipal. However, Salesforce is 8.58 times more volatile than Hartford Municipal Income. It trades about 0.11 of its potential returns per unit of risk. Hartford Municipal Income is currently generating about 0.02 per unit of risk. If you would invest  28,411  in Salesforce on October 23, 2024 and sell it today you would earn a total of  4,045  from holding Salesforce or generate 14.24% return on investment over 90 days.

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

Salesforce  vs.  Hartford Municipal Income

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.

Hartford Municipal Income

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Municipal Income are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Hartford Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Salesforce and Hartford Municipal

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

The idea behind Salesforce and Hartford Municipal Income 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .