Correlation Between Salesforce and Floating Rate

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

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

Diversification Opportunities for Salesforce and Floating Rate

-0.31

Correlation Coefficient

Salesforce  Floating Rate

Very good diversification

The 3 months correlation between Salesforce and Floating is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Floating Rate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floating Rate 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 Floating Rate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floating Rate has no effect on the direction of Salesforce i.e., Salesforce and Floating Rate go up and down completely randomly.

Pair Corralation between Salesforce and Floating Rate

Considering the 90-day investment horizon Salesforce is expected to under-perform the Floating Rate. In addition to that, Salesforce is 17.43 times more volatile than Floating Rate Fund. It trades about -0.04 of its total potential returns per unit of risk. Floating Rate Fund is currently generating about 0.1 per unit of volatility. If you would invest  809.00  in Floating Rate Fund on November 29, 2024 and sell it today you would earn a total of  6.00  from holding Floating Rate Fund or generate 0.74% return on investment over 90 days.

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

Salesforce  vs.  Floating Rate Fund

Salesforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Salesforce is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Floating Rate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Floating Rate Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Floating Rate 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 Floating Rate

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

The idea behind Salesforce and Floating Rate Fund 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.