Correlation Between Salesforce and Devon Energy

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

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

Diversification Opportunities for Salesforce and Devon Energy

-0.61

Correlation Coefficient

Salesforce  Devon Energy

Excellent diversification

The 3 months correlation between Salesforce and Devon is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding salesforce inc and Devon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Devon Energy and Salesforce 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 salesforce inc are associated (or correlated) with Devon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Devon Energy has no effect on the direction of Salesforce i.e., Salesforce and Devon Energy go up and down completely randomly.

Pair Corralation between Salesforce and Devon Energy

Assuming the 90 days trading horizon salesforce inc is expected to under-perform the Devon Energy. In addition to that, Salesforce is 1.01 times more volatile than Devon Energy. It trades about -0.2 of its total potential returns per unit of risk. Devon Energy is currently generating about 0.02 per unit of volatility. If you would invest  21,208  in Devon Energy on October 9, 2024 and sell it today you would earn a total of  52.00  from holding Devon Energy or generate 0.25% return on investment over 90 days.

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

salesforce inc  vs.  Devon Energy

salesforce inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in salesforce inc are ranked lower than 12 (%) 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.

Devon Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Devon Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Pair Trading with Salesforce and Devon Energy

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

The idea behind salesforce inc and Devon Energy 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 Stocks Directory module to find actively traded stocks across global markets.