Correlation Between Salesforce and SM Energy
Can any of the company-specific risk be diversified away by investing in both Salesforce and SM 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 SM Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and SM Energy Co, you can compare the effects of market volatilities on Salesforce and SM 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 SM Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and SM Energy.
Diversification Opportunities for Salesforce and SM Energy
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Salesforce and SM Energy is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and SM Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM 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 are associated (or correlated) with SM Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Energy has no effect on the direction of Salesforce i.e., Salesforce and SM Energy go up and down completely randomly.
Pair Corralation between Salesforce and SM Energy
Considering the 90-day investment horizon Salesforce is expected to generate 0.9 times more return on investment than SM Energy. However, Salesforce is 1.11 times less risky than SM Energy. It trades about 0.34 of its potential returns per unit of risk. SM Energy Co is currently generating about 0.16 per unit of risk. If you would invest 29,377 in Salesforce on August 27, 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 Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. SM Energy Co
Performance |
| Timeline |
| Salesforce |
| SM Energy |
Salesforce and SM Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and SM Energy
The main advantage of trading using opposite Salesforce and SM Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, SM 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 SM Energy will offset losses from the drop in SM Energy's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| SM Energy vs. Vital Energy | SM Energy vs. Permian Resources | SM Energy vs. Matador Resources | SM Energy vs. Obsidian Energy |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |