Correlation Between Salesforce and SWRV

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

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

Diversification Opportunities for Salesforce and SWRV

0.62

Correlation Coefficient

Salesforce  SWRV

Poor diversification

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

Pair Corralation between Salesforce and SWRV

Considering the 90-day investment horizon Salesforce is expected to generate 3.84 times less return on investment than SWRV. But when comparing it to its historical volatility, Salesforce is 8.58 times less risky than SWRV. It trades about 0.27 of its potential returns per unit of risk. SWRV is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.55  in SWRV on September 1, 2024 and sell it today you would earn a total of  0.41  from holding SWRV or generate 74.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.92%
Values	Daily Returns

Salesforce  vs.  SWRV

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.

SWRV

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SWRV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SWRV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and SWRV

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

The idea behind Salesforce and SWRV 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.