Correlation Between Salesforce and Air Canada
Can any of the company-specific risk be diversified away by investing in both Salesforce and Air Canada 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 Air Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SalesforceCom CDR and Air Canada, you can compare the effects of market volatilities on Salesforce and Air Canada 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 Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Air Canada.
Diversification Opportunities for Salesforce and Air Canada
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Salesforce and Air is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SalesforceCom CDR and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada 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 SalesforceCom CDR are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of Salesforce i.e., Salesforce and Air Canada go up and down completely randomly.
Pair Corralation between Salesforce and Air Canada
Assuming the 90 days trading horizon SalesforceCom CDR is expected to generate 0.87 times more return on investment than Air Canada. However, SalesforceCom CDR is 1.15 times less risky than Air Canada. It trades about 0.15 of its potential returns per unit of risk. Air Canada is currently generating about 0.1 per unit of risk. If you would invest 1,901 in SalesforceCom CDR on November 4, 2024 and sell it today you would earn a total of 808.00 from holding SalesforceCom CDR or generate 42.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SalesforceCom CDR vs. Air Canada
Performance |
| Timeline |
| SalesforceCom CDR |
| Air Canada |
Salesforce and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Air Canada
The main advantage of trading using opposite Salesforce and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Air Canada 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 Air Canada will offset losses from the drop in Air Canada's long position.| Salesforce vs. Primaris Retail RE | Salesforce vs. Plaza Retail REIT | Salesforce vs. Firan Technology Group | Salesforce vs. TGS Esports |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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