Correlation Between Salesforce and SWK Holdings
Can any of the company-specific risk be diversified away by investing in both Salesforce and SWK Holdings 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 SWK Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and SWK Holdings, you can compare the effects of market volatilities on Salesforce and SWK Holdings 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 SWK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and SWK Holdings.
Diversification Opportunities for Salesforce and SWK Holdings
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and SWK is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and SWK Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWK Holdings 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 SWK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWK Holdings has no effect on the direction of Salesforce i.e., Salesforce and SWK Holdings go up and down completely randomly.
Pair Corralation between Salesforce and SWK Holdings
Considering the 90-day investment horizon Salesforce is expected to generate 5.27 times more return on investment than SWK Holdings. However, Salesforce is 5.27 times more volatile than SWK Holdings. It trades about 0.35 of its potential returns per unit of risk. SWK Holdings is currently generating about -0.09 per unit of risk. If you would invest 29,377 in Salesforce on August 29, 2024 and sell it today you would earn a total of 4,941 from holding Salesforce or generate 16.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Salesforce vs. SWK Holdings
Performance |
| Timeline |
| Salesforce |
| SWK Holdings |
Salesforce and SWK Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and SWK Holdings
The main advantage of trading using opposite Salesforce and SWK Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, SWK Holdings 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 SWK Holdings will offset losses from the drop in SWK Holdings' long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| SWK Holdings vs. PACCAR Inc | SWK Holdings vs. Pure Cycle | SWK Holdings vs. Adient PLC | SWK Holdings vs. Kenon Holdings |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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