Correlation Between A W and Salesforce
Can any of the company-specific risk be diversified away by investing in both A W 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 A W and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A W FOOD and SalesforceCom CDR, you can compare the effects of market volatilities on A W 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 A W with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of A W and Salesforce.
Diversification Opportunities for A W and Salesforce
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between A W and Salesforce is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding A W FOOD and SalesforceCom CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalesforceCom CDR and A W 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 A W FOOD 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 A W i.e., A W and Salesforce go up and down completely randomly.
Pair Corralation between A W and Salesforce
Assuming the 90 days horizon A W FOOD is expected to generate 0.8 times more return on investment than Salesforce. However, A W FOOD is 1.25 times less risky than Salesforce. It trades about -0.23 of its potential returns per unit of risk. SalesforceCom CDR is currently generating about -0.31 per unit of risk. If you would invest 3,729 in A W FOOD on October 12, 2024 and sell it today you would lose (180.00) from holding A W FOOD or give up 4.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
A W FOOD vs. SalesforceCom CDR
Performance |
| Timeline |
| A W FOOD |
| SalesforceCom CDR |
A W and Salesforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with A W and Salesforce
The main advantage of trading using opposite A W and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A W 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.| A W vs. CI Financial Corp | A W vs. Leons Furniture Limited | A W vs. Cogeco Communications | A W vs. 2028 Investment Grade |
| Salesforce vs. A W FOOD | Salesforce vs. Andlauer Healthcare Gr | Salesforce vs. Brookfield Asset Management | Salesforce vs. Big Rock Brewery |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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