Correlation Between Salesforce and Power Integrations

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

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

Diversification Opportunities for Salesforce and Power Integrations

0.62

Correlation Coefficient

Salesforce  Power Integrations

Poor diversification

The 3 months correlation between Salesforce and Power is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Power Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Integrations 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 Power Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Integrations has no effect on the direction of Salesforce i.e., Salesforce and Power Integrations go up and down completely randomly.

Pair Corralation between Salesforce and Power Integrations

Considering the 90-day investment horizon Salesforce is expected to under-perform the Power Integrations. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.34 times less risky than Power Integrations. The stock trades about -0.18 of its potential returns per unit of risk. The Power Integrations is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  5,881  in Power Integrations on December 22, 2024 and sell it today you would lose (631.00) from holding Power Integrations or give up 10.73% of portfolio value over 90 days.

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

Salesforce  vs.  Power Integrations

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Power Integrations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Integrations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Salesforce and Power Integrations

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

The idea behind Salesforce and Power Integrations 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.