Correlation Between Salesforce and Technology One

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

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

Diversification Opportunities for Salesforce and Technology One

0.91

Correlation Coefficient

Salesforce  Technology One

Almost no diversification

The 3 months correlation between Salesforce and Technology is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Technology One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology One 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 Technology One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology One has no effect on the direction of Salesforce i.e., Salesforce and Technology One go up and down completely randomly.

Pair Corralation between Salesforce and Technology One

Considering the 90-day investment horizon Salesforce is expected to generate 1.79 times less return on investment than Technology One. In addition to that, Salesforce is 1.21 times more volatile than Technology One. It trades about 0.11 of its total potential returns per unit of risk. Technology One is currently generating about 0.23 per unit of volatility. If you would invest  2,387  in Technology One on October 8, 2024 and sell it today you would earn a total of  679.00  from holding Technology One or generate 28.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Salesforce  vs.  Technology One

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.

Technology One

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Technology One are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Technology One unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Technology One

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

The idea behind Salesforce and Technology One 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.