Correlation Between Salesforce and RF MICRO

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

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

Diversification Opportunities for Salesforce and RF MICRO

-0.77

Correlation Coefficient

Salesforce  RF MICRO

Pay attention - limited upside

The 3 months correlation between Salesforce and RFM is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and RF MICRO DEVICES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF MICRO DEVICES 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 RF MICRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF MICRO DEVICES has no effect on the direction of Salesforce i.e., Salesforce and RF MICRO go up and down completely randomly.

Pair Corralation between Salesforce and RF MICRO

Considering the 90-day investment horizon Salesforce is expected to under-perform the RF MICRO. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.24 times less risky than RF MICRO. The stock trades about -0.23 of its potential returns per unit of risk. The RF MICRO DEVICES is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  69.00  in RF MICRO DEVICES on October 11, 2024 and sell it today you would lose (1.00) from holding RF MICRO DEVICES or give up 1.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.71%
Values	Daily Returns

Salesforce  vs.  RF MICRO DEVICES

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.

RF MICRO DEVICES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RF MICRO DEVICES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Salesforce and RF MICRO

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

The idea behind Salesforce and RF MICRO DEVICES 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.