Correlation Between Salesforce and Silver Tiger

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

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

Diversification Opportunities for Salesforce and Silver Tiger

0.12

Correlation Coefficient

Salesforce  Silver Tiger

Average diversification

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

Pair Corralation between Salesforce and Silver Tiger

Considering the 90-day investment horizon Salesforce is expected to generate 1.01 times less return on investment than Silver Tiger. But when comparing it to its historical volatility, Salesforce is 3.42 times less risky than Silver Tiger. It trades about 0.27 of its potential returns per unit of risk. Silver Tiger Metals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Silver Tiger Metals on September 2, 2024 and sell it today you would earn a total of  3.00  from holding Silver Tiger Metals or generate 21.43% return on investment over 90 days.

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

Salesforce  vs.  Silver Tiger Metals

Salesforce

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

Silver Tiger Metals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Tiger Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Silver Tiger reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Silver Tiger

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

The idea behind Salesforce and Silver Tiger Metals 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.