Correlation Between Medtronic Plc and Salesforce

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

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

Diversification Opportunities for Medtronic Plc and Salesforce

0.22

Correlation Coefficient

Medtronic Plc  Salesforce

Modest diversification

The 3 months correlation between Medtronic and Salesforce is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic plc and salesforce inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on salesforce inc and Medtronic Plc 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 Medtronic plc 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 inc has no effect on the direction of Medtronic Plc i.e., Medtronic Plc and Salesforce go up and down completely randomly.

Pair Corralation between Medtronic Plc and Salesforce

Assuming the 90 days trading horizon Medtronic plc is expected to generate 0.63 times more return on investment than Salesforce. However, Medtronic plc is 1.59 times less risky than Salesforce. It trades about -0.07 of its potential returns per unit of risk. salesforce inc is currently generating about -0.12 per unit of risk. If you would invest  25,373  in Medtronic plc on October 8, 2024 and sell it today you would lose (423.00) from holding Medtronic plc or give up 1.67% of portfolio value over 90 days.

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

Medtronic plc  vs.  salesforce inc

Medtronic plc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Medtronic plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Medtronic Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

salesforce inc

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in salesforce inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Salesforce sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medtronic Plc and Salesforce

The main advantage of trading using opposite Medtronic Plc and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medtronic Plc 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 Medtronic plc and salesforce 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.