Correlation Between Salesforce and PTC

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

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

Diversification Opportunities for Salesforce and PTC

0.93

Correlation Coefficient

Salesforce  PTC

Almost no diversification

The 3 months correlation between Salesforce and PTC is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and PTC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC Inc 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 PTC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC Inc has no effect on the direction of Salesforce i.e., Salesforce and PTC go up and down completely randomly.

Pair Corralation between Salesforce and PTC

Considering the 90-day investment horizon Salesforce is expected to generate 1.18 times more return on investment than PTC. However, Salesforce is 1.18 times more volatile than PTC Inc. It trades about 0.25 of its potential returns per unit of risk. PTC Inc is currently generating about 0.12 per unit of risk. If you would invest  25,250  in Salesforce on August 30, 2024 and sell it today you would earn a total of  7,751  from holding Salesforce or generate 30.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Salesforce  vs.  PTC Inc

Salesforce

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 19 (%) 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.

PTC Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PTC Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, PTC may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Salesforce and PTC

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

The idea behind Salesforce and PTC Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.