Correlation Between Big Rock and Salesforce
Can any of the company-specific risk be diversified away by investing in both Big Rock 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 Big Rock and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Rock Brewery and SalesforceCom CDR, you can compare the effects of market volatilities on Big Rock 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 Big Rock with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Rock and Salesforce.
Diversification Opportunities for Big Rock and Salesforce
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Big and Salesforce is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Big Rock Brewery and SalesforceCom CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalesforceCom CDR and Big Rock 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 Big Rock Brewery 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 Big Rock i.e., Big Rock and Salesforce go up and down completely randomly.
Pair Corralation between Big Rock and Salesforce
Assuming the 90 days horizon Big Rock Brewery is expected to generate 5.04 times more return on investment than Salesforce. However, Big Rock is 5.04 times more volatile than SalesforceCom CDR. It trades about 0.09 of its potential returns per unit of risk. SalesforceCom CDR is currently generating about 0.07 per unit of risk. If you would invest 6.87 in Big Rock Brewery on October 26, 2024 and sell it today you would earn a total of 118.13 from holding Big Rock Brewery or generate 1719.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Rock Brewery vs. SalesforceCom CDR
Performance |
| Timeline |
| Big Rock Brewery |
| SalesforceCom CDR |
Big Rock and Salesforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Rock and Salesforce
The main advantage of trading using opposite Big Rock and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Rock 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.| Big Rock vs. Corby Spirit and | Big Rock vs. Gamehost | Big Rock vs. Andrew Peller Limited | Big Rock vs. Buhler Industries |
| Salesforce vs. Cogeco Communications | Salesforce vs. Hemisphere Energy | Salesforce vs. WELL Health Technologies | Salesforce vs. CVW CleanTech |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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