Correlation Between Salesforce and SIMS METAL
Can any of the company-specific risk be diversified away by investing in both Salesforce and SIMS METAL 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 SIMS METAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and SIMS METAL MGT, you can compare the effects of market volatilities on Salesforce and SIMS METAL 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 SIMS METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and SIMS METAL.
Diversification Opportunities for Salesforce and SIMS METAL
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and SIMS is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and SIMS METAL MGT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS METAL MGT 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 SIMS METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMS METAL MGT has no effect on the direction of Salesforce i.e., Salesforce and SIMS METAL go up and down completely randomly.
Pair Corralation between Salesforce and SIMS METAL
Assuming the 90 days trading horizon Salesforce is expected to generate 1.03 times more return on investment than SIMS METAL. However, Salesforce is 1.03 times more volatile than SIMS METAL MGT. It trades about 0.23 of its potential returns per unit of risk. SIMS METAL MGT is currently generating about 0.11 per unit of risk. If you would invest 27,505 in Salesforce on August 31, 2024 and sell it today you would earn a total of 4,045 from holding Salesforce or generate 14.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. SIMS METAL MGT
Performance |
| Timeline |
| Salesforce |
| SIMS METAL MGT |
Salesforce and SIMS METAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and SIMS METAL
The main advantage of trading using opposite Salesforce and SIMS METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, SIMS METAL 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 SIMS METAL will offset losses from the drop in SIMS METAL's long position.| Salesforce vs. SAP SE | Salesforce vs. Superior Plus Corp | Salesforce vs. NMI Holdings | Salesforce vs. Origin Agritech |
| SIMS METAL vs. SENECA FOODS A | SIMS METAL vs. Zijin Mining Group | SIMS METAL vs. LION ONE METALS | SIMS METAL vs. CAL MAINE FOODS |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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