Correlation Between SALESFORCECOM and Summit Midstream

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

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

Diversification Opportunities for SALESFORCECOM and Summit Midstream

0.14

Correlation Coefficient

SALESFORCECOM  Summit Midstream

Average diversification

The 3 months correlation between SALESFORCECOM and Summit is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding SALESFORCECOM INC and Summit Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Midstream and SALESFORCECOM 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 SALESFORCECOM INC are associated (or correlated) with Summit Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Midstream has no effect on the direction of SALESFORCECOM i.e., SALESFORCECOM and Summit Midstream go up and down completely randomly.

Pair Corralation between SALESFORCECOM and Summit Midstream

Assuming the 90 days trading horizon SALESFORCECOM is expected to generate 18.6 times less return on investment than Summit Midstream. But when comparing it to its historical volatility, SALESFORCECOM INC is 2.27 times less risky than Summit Midstream. It trades about 0.01 of its potential returns per unit of risk. Summit Midstream is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,569  in Summit Midstream on October 2, 2024 and sell it today you would earn a total of  2,209  from holding Summit Midstream or generate 140.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.14%
Values	Daily Returns

SALESFORCECOM INC  vs.  Summit Midstream

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 newest stock price disturbance, may contribute to short-term losses for the investors.

Summit Midstream

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summit Midstream has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Summit Midstream is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SALESFORCECOM and Summit Midstream

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

The idea behind SALESFORCECOM INC and Summit Midstream 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.