Correlation Between Salesforce and SPAR

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

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

Diversification Opportunities for Salesforce and SPAR

0.7

Correlation Coefficient

Salesforce  SPAR

Poor diversification

The 3 months correlation between Salesforce and SPAR is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and SPAR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPAR Group 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 SPAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPAR Group has no effect on the direction of Salesforce i.e., Salesforce and SPAR go up and down completely randomly.

Pair Corralation between Salesforce and SPAR

Considering the 90-day investment horizon Salesforce is expected to under-perform the SPAR. In addition to that, Salesforce is 1.54 times more volatile than SPAR Group. It trades about -0.29 of its total potential returns per unit of risk. SPAR Group is currently generating about -0.07 per unit of volatility. If you would invest  1,499,700  in SPAR Group on October 10, 2024 and sell it today you would lose (16,600) from holding SPAR Group or give up 1.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.0%
Values	Daily Returns

Salesforce  vs.  SPAR Group

Salesforce

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 7 (%) 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.

SPAR Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPAR Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, SPAR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and SPAR

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

The idea behind Salesforce and SPAR Group 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.