Correlation Between SALESFORCE INC and Dominion Energy

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

By analyzing existing cross correlation between SALESFORCE INC CDR and Dominion Energy, you can compare the effects of market volatilities on SALESFORCE INC and Dominion Energy 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 INC with a short position of Dominion Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SALESFORCE INC and Dominion Energy.

Diversification Opportunities for SALESFORCE INC and Dominion Energy

0.47

Correlation Coefficient

SALESFORCE INC  Dominion Energy

Very weak diversification

The 3 months correlation between SALESFORCE and Dominion is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SALESFORCE INC CDR and Dominion Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominion Energy and SALESFORCE INC 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 INC CDR are associated (or correlated) with Dominion Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominion Energy has no effect on the direction of SALESFORCE INC i.e., SALESFORCE INC and Dominion Energy go up and down completely randomly.

Pair Corralation between SALESFORCE INC and Dominion Energy

Assuming the 90 days trading horizon SALESFORCE INC CDR is expected to generate 2.14 times more return on investment than Dominion Energy. However, SALESFORCE INC is 2.14 times more volatile than Dominion Energy. It trades about 0.18 of its potential returns per unit of risk. Dominion Energy is currently generating about 0.0 per unit of risk. If you would invest  1,337  in SALESFORCE INC CDR on September 17, 2024 and sell it today you would earn a total of  533.00  from holding SALESFORCE INC CDR or generate 39.87% return on investment over 90 days.

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

SALESFORCE INC CDR  vs.  Dominion Energy

SALESFORCE INC CDR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SALESFORCE INC CDR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SALESFORCE INC reported solid returns over the last few months and may actually be approaching a breakup point.

Dominion Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dominion Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dominion Energy is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SALESFORCE INC and Dominion Energy

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

The idea behind SALESFORCE INC CDR and Dominion 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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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.