Correlation Between Air Canada and Salesforce
Can any of the company-specific risk be diversified away by investing in both Air Canada 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 Air Canada and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and SalesforceCom CDR, you can compare the effects of market volatilities on Air Canada 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 Air Canada with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Salesforce.
Diversification Opportunities for Air Canada and Salesforce
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Air and Salesforce is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and SalesforceCom CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalesforceCom CDR and Air Canada 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 Air Canada 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 Air Canada i.e., Air Canada and Salesforce go up and down completely randomly.
Pair Corralation between Air Canada and Salesforce
Assuming the 90 days horizon Air Canada is expected to generate 2.95 times less return on investment than Salesforce. But when comparing it to its historical volatility, Air Canada is 1.11 times less risky than Salesforce. It trades about 0.03 of its potential returns per unit of risk. SalesforceCom CDR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,698 in SalesforceCom CDR on August 31, 2024 and sell it today you would earn a total of 933.00 from holding SalesforceCom CDR or generate 54.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Canada vs. SalesforceCom CDR
Performance |
| Timeline |
| Air Canada |
| SalesforceCom CDR |
Air Canada and Salesforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Salesforce
The main advantage of trading using opposite Air Canada and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada 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 Air Canada 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.| Salesforce vs. Mene Inc | Salesforce vs. Africa Oil Corp | Salesforce vs. Financial 15 Split | Salesforce vs. Rubicon Organics |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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