Correlation Between Workday and Salesforce

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

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

Diversification Opportunities for Workday and Salesforce

0.77
  Correlation Coefficient
Workday
Salesforce

Poor diversification

The 3 months correlation between Workday and Salesforce is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Workday and Salesforce in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Workday 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 Workday 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 Workday i.e., Workday and Salesforce go up and down completely randomly.

Pair Corralation between Workday and Salesforce

Given the investment horizon of 90 days Workday is expected to generate 1.29 times more return on investment than Salesforce. However, Workday is 1.29 times more volatile than Salesforce. It trades about 0.05 of its potential returns per unit of risk. Salesforce is currently generating about 0.0 per unit of risk. If you would invest  21,663  in Workday on June 23, 2021 and sell it today you would earn a total of  5,355  from holding Workday or generate 24.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Workday  vs.  Salesforce

 Performance (%) 
      Timeline 
Workday 
 Workday Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Workday are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Workday showed solid returns over the last few months and may actually be approaching a breakup point.

Workday Price Channel

Salesforce 
 Salesforce Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Salesforce may actually be approaching a critical reversion point that can send shares even higher in October 2021.

Salesforce Price Channel

Workday and Salesforce Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Workday and Salesforce

The main advantage of trading using opposite Workday and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workday 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 Workday 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 Shere Portfolio module to track or share privately all of your investments from the convenience of any device.

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