Correlation Between Salesforce and IDEX Metals

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

By analyzing existing cross correlation between SalesforceCom CDR and IDEX Metals Corp, you can compare the effects of market volatilities on Salesforce and IDEX Metals 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 IDEX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and IDEX Metals.

Diversification Opportunities for Salesforce and IDEX Metals

-0.24

Correlation Coefficient

Salesforce  IDEX Metals

Very good diversification

The 3 months correlation between Salesforce and IDEX is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SalesforceCom CDR and IDEX Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDEX Metals Corp 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 IDEX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDEX Metals Corp has no effect on the direction of Salesforce i.e., Salesforce and IDEX Metals go up and down completely randomly.

Pair Corralation between Salesforce and IDEX Metals

Assuming the 90 days trading horizon SalesforceCom CDR is expected to generate 0.47 times more return on investment than IDEX Metals. However, SalesforceCom CDR is 2.13 times less risky than IDEX Metals. It trades about 0.0 of its potential returns per unit of risk. IDEX Metals Corp is currently generating about -0.05 per unit of risk. If you would invest  2,081  in SalesforceCom CDR on April 24, 2025 and sell it today you would lose (12.00) from holding SalesforceCom CDR or give up 0.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	48.39%
Values	Daily Returns

SalesforceCom CDR  vs.  IDEX Metals Corp

SalesforceCom CDR

Risk-Adjusted Performance

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 recent stock price disarray, may contribute to short-term losses for the investors.

IDEX Metals Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days IDEX Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Salesforce and IDEX Metals

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

The idea behind SalesforceCom CDR and IDEX Metals Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.