Correlation Between Salesforce and Intrepid Potash

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

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

Diversification Opportunities for Salesforce and Intrepid Potash

0.57

Correlation Coefficient

Salesforce  Intrepid Potash

Very weak diversification

The 3 months correlation between Salesforce and Intrepid is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Intrepid Potash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrepid Potash 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 Intrepid Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrepid Potash has no effect on the direction of Salesforce i.e., Salesforce and Intrepid Potash go up and down completely randomly.

Pair Corralation between Salesforce and Intrepid Potash

Considering the 90-day investment horizon Salesforce is expected to generate 20.04 times less return on investment than Intrepid Potash. But when comparing it to its historical volatility, Salesforce is 2.09 times less risky than Intrepid Potash. It trades about 0.01 of its potential returns per unit of risk. Intrepid Potash is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,325  in Intrepid Potash on April 25, 2025 and sell it today you would earn a total of  326.00  from holding Intrepid Potash or generate 9.8% return on investment over 90 days.

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

Salesforce  vs.  Intrepid Potash

Salesforce

Risk-Adjusted Performance

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.

Intrepid Potash

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intrepid Potash are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Intrepid Potash demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Intrepid Potash

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

The idea behind Salesforce and Intrepid Potash 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 the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.