Correlation Between Salesforce and Hamilton Mid

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

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

Diversification Opportunities for Salesforce and Hamilton Mid

0.12

Correlation Coefficient

Salesforce  Hamilton Mid

Average diversification

The 3 months correlation between Salesforce and Hamilton is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Hamilton Mid Cap Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Mid Cap 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 Hamilton Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Mid Cap has no effect on the direction of Salesforce i.e., Salesforce and Hamilton Mid go up and down completely randomly.

Pair Corralation between Salesforce and Hamilton Mid

Considering the 90-day investment horizon Salesforce is expected to generate 0.71 times more return on investment than Hamilton Mid. However, Salesforce is 1.41 times less risky than Hamilton Mid. It trades about 0.11 of its potential returns per unit of risk. Hamilton Mid Cap Financials is currently generating about 0.03 per unit of risk. If you would invest  29,344  in Salesforce on October 26, 2024 and sell it today you would earn a total of  4,122  from holding Salesforce or generate 14.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Salesforce  vs.  Hamilton Mid Cap Financials

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.

Hamilton Mid Cap

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Mid Cap Financials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Hamilton Mid may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Salesforce and Hamilton Mid

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

The idea behind Salesforce and Hamilton Mid Cap Financials 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.