Correlation Between Salesforce and Martin Marietta

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

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

Diversification Opportunities for Salesforce and Martin Marietta

0.71

Correlation Coefficient

Salesforce  Martin Marietta

Poor diversification

The 3 months correlation between Salesforce and Martin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Martin Marietta Materials, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Mate 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 Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Mate has no effect on the direction of Salesforce i.e., Salesforce and Martin Marietta go up and down completely randomly.

Pair Corralation between Salesforce and Martin Marietta

Considering the 90-day investment horizon Salesforce is expected to generate 148.31 times more return on investment than Martin Marietta. However, Salesforce is 148.31 times more volatile than Martin Marietta Materials,. It trades about 0.11 of its potential returns per unit of risk. Martin Marietta Materials, is currently generating about 0.13 per unit of risk. If you would invest  29,124  in Salesforce on October 8, 2024 and sell it today you would earn a total of  4,166  from holding Salesforce or generate 14.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.65%
Values	Daily Returns

Salesforce  vs.  Martin Marietta Materials,

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.

Martin Marietta Mate

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Martin Marietta 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 Martin Marietta

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

The idea behind Salesforce and Martin Marietta Materials, 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.