Correlation Between Salesforce and KINDER

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

Diversification Opportunities for Salesforce and KINDER

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Salesforce and KINDER is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and KINDER MORGAN ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN ENERGY has no effect on the direction of Salesforce i.e., Salesforce and KINDER go up and down completely randomly.

Pair Corralation between Salesforce and KINDER

Considering the 90-day investment horizon Salesforce is expected to generate 29.69 times less return on investment than KINDER. But when comparing it to its historical volatility, Salesforce is 36.39 times less risky than KINDER. It trades about 0.08 of its potential returns per unit of risk. KINDER MORGAN ENERGY is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10,249  in KINDER MORGAN ENERGY on November 9, 2024 and sell it today you would earn a total of  355.00  from holding KINDER MORGAN ENERGY or generate 3.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy73.43%
ValuesDaily Returns

Salesforce  vs.  KINDER MORGAN ENERGY

 Performance 
       Timeline  
Salesforce 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Salesforce is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
KINDER MORGAN ENERGY 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days KINDER MORGAN ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KINDER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Salesforce and KINDER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Salesforce and KINDER

The main advantage of trading using opposite Salesforce and KINDER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, KINDER 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 KINDER will offset losses from the drop in KINDER's long position.
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The idea behind Salesforce and KINDER MORGAN ENERGY 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.
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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