Correlation Between Salesforce and Silver Wolf

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Can any of the company-specific risk be diversified away by investing in both Salesforce and Silver Wolf 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 Silver Wolf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SalesforceCom CDR and Silver Wolf Exploration, you can compare the effects of market volatilities on Salesforce and Silver Wolf 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 Silver Wolf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Silver Wolf.

Diversification Opportunities for Salesforce and Silver Wolf

  Correlation Coefficient

Very good diversification

The 3 months correlation between Salesforce and Silver is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding SalesforceCom CDR and Silver Wolf Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Wolf Exploration 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 SalesforceCom CDR are associated (or correlated) with Silver Wolf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Wolf Exploration has no effect on the direction of Salesforce i.e., Salesforce and Silver Wolf go up and down completely randomly.

Pair Corralation between Salesforce and Silver Wolf

Assuming the 90 days trading horizon Salesforce is expected to generate 2.3 times less return on investment than Silver Wolf. But when comparing it to its historical volatility, SalesforceCom CDR is 3.4 times less risky than Silver Wolf. It trades about 0.05 of its potential returns per unit of risk. Silver Wolf Exploration is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Silver Wolf Exploration on January 22, 2024 and sell it today you would lose (5.00) from holding Silver Wolf Exploration or give up 27.78% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
ValuesDaily Returns

SalesforceCom CDR  vs.  Silver Wolf Exploration

SalesforceCom CDR 

Risk-Adjusted Performance

0 of 100

Very Weak
Over the last 90 days SalesforceCom CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Salesforce is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
Silver Wolf Exploration 

Risk-Adjusted Performance

7 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Wolf Exploration are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Silver Wolf showed solid returns over the last few months and may actually be approaching a breakup point.

Salesforce and Silver Wolf Volatility Contrast

   Predicted Return Density   

Pair Trading with Salesforce and Silver Wolf

The main advantage of trading using opposite Salesforce and Silver Wolf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Silver Wolf 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 Silver Wolf will offset losses from the drop in Silver Wolf's long position.
The idea behind SalesforceCom CDR and Silver Wolf Exploration 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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