Correlation Between Salesforce and American Hotel
Can any of the company-specific risk be diversified away by investing in both Salesforce and American Hotel 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 American Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SalesforceCom CDR and American Hotel Income, you can compare the effects of market volatilities on Salesforce and American Hotel 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 American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and American Hotel.
Diversification Opportunities for Salesforce and American Hotel
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Salesforce and American is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding SalesforceCom CDR and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income 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 American Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Salesforce i.e., Salesforce and American Hotel go up and down completely randomly.
Pair Corralation between Salesforce and American Hotel
Assuming the 90 days trading horizon SalesforceCom CDR is expected to under-perform the American Hotel. But the stock apears to be less risky and, when comparing its historical volatility, SalesforceCom CDR is 5.0 times less risky than American Hotel. The stock trades about -0.26 of its potential returns per unit of risk. The American Hotel Income is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 50.00 in American Hotel Income on October 22, 2024 and sell it today you would earn a total of 13.00 from holding American Hotel Income or generate 26.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SalesforceCom CDR vs. American Hotel Income
Performance |
| Timeline |
| SalesforceCom CDR |
| American Hotel Income |
Salesforce and American Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and American Hotel
The main advantage of trading using opposite Salesforce and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, American Hotel 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 American Hotel will offset losses from the drop in American Hotel's long position.| Salesforce vs. CVW CleanTech | Salesforce vs. Caribbean Utilities | Salesforce vs. Sangoma Technologies Corp | Salesforce vs. Birchtech Corp |
| American Hotel vs. Brookfield Asset Management | American Hotel vs. Profound Medical Corp | American Hotel vs. Element Fleet Management | American Hotel vs. SalesforceCom CDR |
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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