Correlation Between Clearfield and Salesforce

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

Diversification Opportunities for Clearfield and Salesforce

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Clearfield and Salesforce is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Clearfield and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Clearfield 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 Clearfield 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 Clearfield i.e., Clearfield and Salesforce go up and down completely randomly.

Pair Corralation between Clearfield and Salesforce

Given the investment horizon of 90 days Clearfield is expected to generate 1.79 times more return on investment than Salesforce. However, Clearfield is 1.79 times more volatile than Salesforce. It trades about 0.1 of its potential returns per unit of risk. Salesforce is currently generating about -0.02 per unit of risk. If you would invest  2,507  in Clearfield on August 31, 2022 and sell it today you would earn a total of  9,881  from holding Clearfield or generate 394.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Clearfield  vs.  Salesforce

 Performance (%) 
       Timeline  
Clearfield 
Clearfield Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Clearfield are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Clearfield exhibited solid returns over the last few months and may actually be approaching a breakup point.

Clearfield Price Channel

Salesforce 
Salesforce Performance
0 of 100
Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Salesforce is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Salesforce Price Channel

Clearfield and Salesforce Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Clearfield and Salesforce

The main advantage of trading using opposite Clearfield and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearfield 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.
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The idea behind Clearfield 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.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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