Correlation Between Salesforce and Rock Oak

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Can any of the company-specific risk be diversified away by investing in both Salesforce and Rock Oak 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 Rock Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Rock Oak E, you can compare the effects of market volatilities on Salesforce and Rock Oak 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 Rock Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Rock Oak.

Diversification Opportunities for Salesforce and Rock Oak

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Salesforce and Rock is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Rock Oak E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rock Oak E 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 are associated (or correlated) with Rock Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rock Oak E has no effect on the direction of Salesforce i.e., Salesforce and Rock Oak go up and down completely randomly.

Pair Corralation between Salesforce and Rock Oak

Considering the 90-day investment horizon Salesforce is expected to generate 2.01 times more return on investment than Rock Oak. However, Salesforce is 2.01 times more volatile than Rock Oak E. It trades about 0.34 of its potential returns per unit of risk. Rock Oak E is currently generating about 0.36 per unit of risk. If you would invest  29,377  in Salesforce on August 28, 2024 and sell it today you would earn a total of  4,534  from holding Salesforce or generate 15.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Salesforce  vs.  Rock Oak E

 Performance 
       Timeline  
Salesforce 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.
Rock Oak E 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Rock Oak E are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rock Oak may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Salesforce and Rock Oak Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Salesforce and Rock Oak

The main advantage of trading using opposite Salesforce and Rock Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Rock Oak 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 Rock Oak will offset losses from the drop in Rock Oak's long position.
The idea behind Salesforce and Rock Oak E 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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