Correlation Between Salesforce and Ancorathelen Small

Can any of the company-specific risk be diversified away by investing in both Salesforce and Ancorathelen Small 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 Ancorathelen Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Salesforce and Ancorathelen Small Mid Cap, you can compare the effects of market volatilities on Salesforce and Ancorathelen Small 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 Ancorathelen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Ancorathelen Small.

Diversification Opportunities for Salesforce and Ancorathelen Small

0.69

Correlation Coefficient

Salesforce  Ancorathelen Small

Poor diversification

The 3 months correlation between Salesforce and Ancorathelen is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Ancorathelen Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ancorathelen Small Mid 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 Ancorathelen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ancorathelen Small Mid has no effect on the direction of Salesforce i.e., Salesforce and Ancorathelen Small go up and down completely randomly.

Pair Corralation between Salesforce and Ancorathelen Small

Considering the 90-day investment horizon Salesforce is expected to generate 1.86 times more return on investment than Ancorathelen Small. However, Salesforce is 1.86 times more volatile than Ancorathelen Small Mid Cap. It trades about 0.23 of its potential returns per unit of risk. Ancorathelen Small Mid Cap is currently generating about 0.37 per unit of risk. If you would invest  29,640  in Salesforce on August 31, 2024 and sell it today you would earn a total of  3,361  from holding Salesforce or generate 11.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Salesforce  vs.  Ancorathelen Small Mid Cap

Salesforce

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

Ancorathelen Small Mid

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ancorathelen Small Mid Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ancorathelen Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Ancorathelen Small

The main advantage of trading using opposite Salesforce and Ancorathelen Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Ancorathelen Small 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 Ancorathelen Small will offset losses from the drop in Ancorathelen Small's long position.

The idea behind Salesforce and Ancorathelen Small Mid Cap 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.

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.