Correlation Between Image Protect and Salesforce

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

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

Diversification Opportunities for Image Protect and Salesforce

0.15

Correlation Coefficient

Image Protect  Salesforce

Average diversification

The 3 months correlation between Image and Salesforce is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Image Protect and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Image Protect 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 Image Protect are associated (or correlated) with Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Image Protect i.e., Image Protect and Salesforce go up and down completely randomly.

Pair Corralation between Image Protect and Salesforce

Given the investment horizon of 90 days Image Protect is expected to generate 82.16 times more return on investment than Salesforce. However, Image Protect is 82.16 times more volatile than Salesforce. It trades about 0.18 of its potential returns per unit of risk. Salesforce is currently generating about 0.29 per unit of risk. If you would invest  0.01  in Image Protect on September 7, 2024 and sell it today you would earn a total of  0.00  from holding Image Protect or generate 0.0% return on investment over 90 days.

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

Image Protect  vs.  Salesforce

Image Protect

Risk-Adjusted Performance

13 of 100

Good

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

Salesforce

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Image Protect and Salesforce

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

The idea behind Image Protect and Salesforce 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.