Correlation Between IDEX Metals and Salesforce

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

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

Diversification Opportunities for IDEX Metals and Salesforce

-0.24

Correlation Coefficient

IDEX Metals  Salesforce

Very good diversification

The 3 months correlation between IDEX and Salesforce is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding IDEX Metals Corp and SalesforceCom CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalesforceCom CDR and IDEX Metals 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 IDEX Metals Corp 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 SalesforceCom CDR has no effect on the direction of IDEX Metals i.e., IDEX Metals and Salesforce go up and down completely randomly.

Pair Corralation between IDEX Metals and Salesforce

Assuming the 90 days trading horizon IDEX Metals Corp is expected to under-perform the Salesforce. In addition to that, IDEX Metals is 2.13 times more volatile than SalesforceCom CDR. It trades about -0.05 of its total potential returns per unit of risk. SalesforceCom CDR is currently generating about 0.0 per unit of volatility. 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

IDEX Metals Corp  vs.  SalesforceCom CDR

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.

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.

Pair Trading with IDEX Metals and Salesforce

The main advantage of trading using opposite IDEX Metals and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDEX Metals 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 IDEX Metals Corp and SalesforceCom CDR 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.