Correlation Between Mount Gibson and Salesforce

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

By analyzing existing cross correlation between Mount Gibson Iron and Salesforce, you can compare the effects of market volatilities on Mount Gibson and Salesforce 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 Mount Gibson with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mount Gibson and Salesforce.

Diversification Opportunities for Mount Gibson and Salesforce

-0.47

Correlation Coefficient

Mount Gibson  Salesforce

Very good diversification

The 3 months correlation between Mount and Salesforce is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Mount Gibson 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 Mount Gibson Iron are associated (or correlated) with Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Mount Gibson i.e., Mount Gibson and Salesforce go up and down completely randomly.

Pair Corralation between Mount Gibson and Salesforce

Assuming the 90 days horizon Mount Gibson Iron is expected to under-perform the Salesforce. In addition to that, Mount Gibson is 2.5 times more volatile than Salesforce. It trades about -0.01 of its total potential returns per unit of risk. Salesforce is currently generating about 0.09 per unit of volatility. If you would invest  13,689  in Salesforce on October 11, 2024 and sell it today you would earn a total of  17,896  from holding Salesforce or generate 130.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mount Gibson Iron  vs.  Salesforce

Mount Gibson Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mount Gibson Iron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Salesforce

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Salesforce unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mount Gibson and Salesforce

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

The idea behind Mount Gibson Iron and Salesforce 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.