Correlation Between Highwood Asset and Salesforce

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

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

Diversification Opportunities for Highwood Asset and Salesforce

0.46

Correlation Coefficient

Highwood Asset  Salesforce

Very weak diversification

The 3 months correlation between Highwood and Salesforce is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Highwood Asset Management and SalesforceCom CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalesforceCom CDR and Highwood Asset 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 Highwood Asset Management 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 SalesforceCom CDR has no effect on the direction of Highwood Asset i.e., Highwood Asset and Salesforce go up and down completely randomly.

Pair Corralation between Highwood Asset and Salesforce

Assuming the 90 days horizon Highwood Asset Management is expected to under-perform the Salesforce. In addition to that, Highwood Asset is 1.23 times more volatile than SalesforceCom CDR. It trades about -0.01 of its total potential returns per unit of risk. SalesforceCom CDR is currently generating about 0.27 per unit of volatility. If you would invest  1,977  in SalesforceCom CDR on September 4, 2024 and sell it today you would earn a total of  666.00  from holding SalesforceCom CDR or generate 33.69% return on investment over 90 days.

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

Highwood Asset Management  vs.  SalesforceCom CDR

Highwood Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highwood Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Highwood Asset is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

SalesforceCom CDR

Risk-Adjusted Performance

21 of 100

Solid

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

Pair Trading with Highwood Asset and Salesforce

The main advantage of trading using opposite Highwood Asset and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highwood Asset 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 Highwood Asset Management and SalesforceCom CDR 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.