Correlation Between KeyCorp and SALESFORCECOM

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

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

Diversification Opportunities for KeyCorp and SALESFORCECOM

-0.2

Correlation Coefficient

KeyCorp  SALESFORCECOM

Good diversification

The 3 months correlation between KeyCorp and SALESFORCECOM is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and SALESFORCECOM INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SALESFORCECOM INC and KeyCorp 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 KeyCorp are associated (or correlated) with SALESFORCECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SALESFORCECOM INC has no effect on the direction of KeyCorp i.e., KeyCorp and SALESFORCECOM go up and down completely randomly.

Pair Corralation between KeyCorp and SALESFORCECOM

Assuming the 90 days trading horizon KeyCorp is expected to generate 191.59 times less return on investment than SALESFORCECOM. But when comparing it to its historical volatility, KeyCorp is 45.72 times less risky than SALESFORCECOM. It trades about 0.02 of its potential returns per unit of risk. SALESFORCECOM INC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,866  in SALESFORCECOM INC on September 29, 2024 and sell it today you would lose (94.00) from holding SALESFORCECOM INC or give up 1.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.94%
Values	Daily Returns

KeyCorp  vs.  SALESFORCECOM INC

KeyCorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KeyCorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, KeyCorp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

SALESFORCECOM INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SALESFORCECOM INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SALESFORCECOM is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KeyCorp and SALESFORCECOM

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

The idea behind KeyCorp and SALESFORCECOM INC 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.