Correlation Between Propel Holdings and Salesforce

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

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

Diversification Opportunities for Propel Holdings and Salesforce

0.73

Correlation Coefficient

Propel Holdings  Salesforce

Poor diversification

The 3 months correlation between Propel and Salesforce is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Propel Holdings and SalesforceCom CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalesforceCom CDR and Propel Holdings 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 Propel Holdings 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 Propel Holdings i.e., Propel Holdings and Salesforce go up and down completely randomly.

Pair Corralation between Propel Holdings and Salesforce

Assuming the 90 days trading horizon Propel Holdings is expected to generate 1.85 times more return on investment than Salesforce. However, Propel Holdings is 1.85 times more volatile than SalesforceCom CDR. It trades about -0.01 of its potential returns per unit of risk. SalesforceCom CDR is currently generating about -0.33 per unit of risk. If you would invest  3,729  in Propel Holdings on October 5, 2024 and sell it today you would lose (39.00) from holding Propel Holdings or give up 1.05% of portfolio value over 90 days.

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

Propel Holdings  vs.  SalesforceCom CDR

Propel Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Propel Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Propel Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

SalesforceCom CDR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SalesforceCom CDR are ranked lower than 9 (%) 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 Propel Holdings and Salesforce

The main advantage of trading using opposite Propel Holdings and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Propel Holdings 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 Propel Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.