Correlation Between Salesforce and First Eagle

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

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

Diversification Opportunities for Salesforce and First Eagle

-0.04

Correlation Coefficient

Salesforce  First Eagle

Good diversification

The 3 months correlation between Salesforce and First is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and First Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Gold 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 First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Gold has no effect on the direction of Salesforce i.e., Salesforce and First Eagle go up and down completely randomly.

Pair Corralation between Salesforce and First Eagle

Considering the 90-day investment horizon Salesforce is expected to under-perform the First Eagle. In addition to that, Salesforce is 1.27 times more volatile than First Eagle Gold. It trades about -0.23 of its total potential returns per unit of risk. First Eagle Gold is currently generating about 0.3 per unit of volatility. If you would invest  2,367  in First Eagle Gold on January 26, 2024 and sell it today you would earn a total of  240.00  from holding First Eagle Gold or generate 10.14% return on investment over 90 days.

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

Salesforce  vs.  First Eagle Gold

Salesforce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Salesforce 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 recent stock price disarray, may contribute to short-term losses for the investors.

First Eagle Gold

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Gold are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, First Eagle showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and First Eagle

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

The idea behind Salesforce and First Eagle Gold 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.