Correlation Between Clean Energy and Salesforce

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

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

Diversification Opportunities for Clean Energy and Salesforce

0.07

Correlation Coefficient

Clean Energy  Salesforce

Significant diversification

The 3 months correlation between Clean and Salesforce is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Clean Energy 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 Clean Energy Fuels 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 has no effect on the direction of Clean Energy i.e., Clean Energy and Salesforce go up and down completely randomly.

Pair Corralation between Clean Energy and Salesforce

Assuming the 90 days horizon Clean Energy is expected to generate 1.39 times less return on investment than Salesforce. In addition to that, Clean Energy is 1.75 times more volatile than Salesforce. It trades about 0.06 of its total potential returns per unit of risk. Salesforce is currently generating about 0.14 per unit of volatility. If you would invest  26,459  in Salesforce on October 24, 2024 and sell it today you would earn a total of  4,921  from holding Salesforce or generate 18.6% return on investment over 90 days.

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

Clean Energy Fuels  vs.  Salesforce

Clean Energy Fuels

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Energy Fuels are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Clean Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Salesforce

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Salesforce unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clean Energy and Salesforce

The main advantage of trading using opposite Clean Energy and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy 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 Clean Energy Fuels and Salesforce 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.