Correlation Between Phillips and Salesforce

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

By analyzing existing cross correlation between Phillips 66 and salesforce inc, you can compare the effects of market volatilities on Phillips 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 Phillips with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phillips and Salesforce.

Diversification Opportunities for Phillips and Salesforce

0.21

Correlation Coefficient

Phillips  Salesforce

Modest diversification

The 3 months correlation between Phillips and Salesforce is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Phillips 66 and salesforce inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on salesforce inc and Phillips 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 Phillips 66 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 Phillips i.e., Phillips and Salesforce go up and down completely randomly.

Pair Corralation between Phillips and Salesforce

Assuming the 90 days trading horizon Phillips 66 is expected to under-perform the Salesforce. But the stock apears to be less risky and, when comparing its historical volatility, Phillips 66 is 2.06 times less risky than Salesforce. The stock trades about -0.53 of its potential returns per unit of risk. The salesforce inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,169  in salesforce inc on October 4, 2024 and sell it today you would earn a total of  264.00  from holding salesforce inc or generate 2.88% return on investment over 90 days.

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

Phillips 66  vs.  salesforce inc

Phillips 66

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phillips 66 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

salesforce inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in salesforce inc are ranked lower than 16 (%) 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 Phillips and Salesforce

The main advantage of trading using opposite Phillips and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phillips 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 Phillips 66 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.