Correlation Between Salesforce and Evolve Cyber

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

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

Diversification Opportunities for Salesforce and Evolve Cyber

0.88

Correlation Coefficient

Salesforce  Evolve Cyber

Very poor diversification

The 3 months correlation between Salesforce and Evolve is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Evolve Cyber Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Cyber Security 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 Evolve Cyber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Cyber Security has no effect on the direction of Salesforce i.e., Salesforce and Evolve Cyber go up and down completely randomly.

Pair Corralation between Salesforce and Evolve Cyber

Considering the 90-day investment horizon Salesforce is expected to generate 1.4 times more return on investment than Evolve Cyber. However, Salesforce is 1.4 times more volatile than Evolve Cyber Security. It trades about 0.27 of its potential returns per unit of risk. Evolve Cyber Security is currently generating about 0.1 per unit of risk. If you would invest  24,767  in Salesforce on September 2, 2024 and sell it today you would earn a total of  8,232  from holding Salesforce or generate 33.24% return on investment over 90 days.

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

Salesforce  vs.  Evolve Cyber Security

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 unsteady basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

Evolve Cyber Security

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Cyber Security are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Evolve Cyber may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Salesforce and Evolve Cyber

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

The idea behind Salesforce and Evolve Cyber Security 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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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.