Correlation Between Salesforce and Sterling Metals
Can any of the company-specific risk be diversified away by investing in both Salesforce and Sterling Metals 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 Sterling Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Sterling Metals Corp, you can compare the effects of market volatilities on Salesforce and Sterling Metals 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 Sterling Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Sterling Metals.
Diversification Opportunities for Salesforce and Sterling Metals
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Salesforce and Sterling is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Sterling Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Metals Corp 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 Sterling Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Metals Corp has no effect on the direction of Salesforce i.e., Salesforce and Sterling Metals go up and down completely randomly.
Pair Corralation between Salesforce and Sterling Metals
Considering the 90-day investment horizon Salesforce is expected to generate 3.41 times less return on investment than Sterling Metals. But when comparing it to its historical volatility, Salesforce is 6.66 times less risky than Sterling Metals. It trades about 0.07 of its potential returns per unit of risk. Sterling Metals Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8.09 in Sterling Metals Corp on August 31, 2024 and sell it today you would lose (5.67) from holding Sterling Metals Corp or give up 70.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Salesforce vs. Sterling Metals Corp
Performance |
| Timeline |
| Salesforce |
| Sterling Metals Corp |
Salesforce and Sterling Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Sterling Metals
The main advantage of trading using opposite Salesforce and Sterling Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Sterling Metals 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 Sterling Metals will offset losses from the drop in Sterling Metals' long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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