Correlation Between HEALTHSTREAM (HL5SG) and Salesforce

Can any of the company-specific risk be diversified away by investing in both HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM (HL5SG) and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HEALTHSTREAM and Salesforce, you can compare the effects of market volatilities on HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM (HL5SG) with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHSTREAM (HL5SG) and Salesforce.

Diversification Opportunities for HEALTHSTREAM (HL5SG) and Salesforce

0.59

Correlation Coefficient

HEALTHSTREAM (HL5SG)  Salesforce

Very weak diversification

The 3 months correlation between HEALTHSTREAM and Salesforce is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHSTREAM and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM 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 HEALTHSTREAM (HL5SG) i.e., HEALTHSTREAM (HL5SG) and Salesforce go up and down completely randomly.

Pair Corralation between HEALTHSTREAM (HL5SG) and Salesforce

Assuming the 90 days trading horizon HEALTHSTREAM is expected to generate 0.69 times more return on investment than Salesforce. However, HEALTHSTREAM is 1.45 times less risky than Salesforce. It trades about -0.03 of its potential returns per unit of risk. Salesforce is currently generating about -0.17 per unit of risk. If you would invest  3,017  in HEALTHSTREAM on December 28, 2024 and sell it today you would lose (97.00) from holding HEALTHSTREAM or give up 3.22% of portfolio value over 90 days.

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

HEALTHSTREAM  vs.  Salesforce

HEALTHSTREAM (HL5SG)

Risk-Adjusted Performance

Very Weak

Over the last 90 days HEALTHSTREAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HEALTHSTREAM (HL5SG) is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Salesforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with HEALTHSTREAM (HL5SG) and Salesforce

The main advantage of trading using opposite HEALTHSTREAM (HL5SG) and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..