Correlation Between Salesforce and Exco Technologies
Can any of the company-specific risk be diversified away by investing in both Salesforce and Exco Technologies 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 Exco Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SalesforceCom CDR and Exco Technologies Limited, you can compare the effects of market volatilities on Salesforce and Exco Technologies 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 Exco Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Exco Technologies.
Diversification Opportunities for Salesforce and Exco Technologies
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and Exco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SalesforceCom CDR and Exco Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exco Technologies 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 Exco Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exco Technologies has no effect on the direction of Salesforce i.e., Salesforce and Exco Technologies go up and down completely randomly.
Pair Corralation between Salesforce and Exco Technologies
Assuming the 90 days trading horizon SalesforceCom CDR is expected to generate 1.17 times more return on investment than Exco Technologies. However, Salesforce is 1.17 times more volatile than Exco Technologies Limited. It trades about 0.07 of its potential returns per unit of risk. Exco Technologies Limited is currently generating about 0.03 per unit of risk. 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SalesforceCom CDR vs. Exco Technologies Limited
Performance |
| Timeline |
| SalesforceCom CDR |
| Exco Technologies |
Salesforce and Exco Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Exco Technologies
The main advantage of trading using opposite Salesforce and Exco Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Exco Technologies 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 Exco Technologies will offset losses from the drop in Exco Technologies' long position.| Salesforce vs. Mene Inc | Salesforce vs. Africa Oil Corp | Salesforce vs. Financial 15 Split | Salesforce vs. Rubicon Organics |
| Exco Technologies vs. Berkshire Hathaway CDR | Exco Technologies vs. JPMorgan Chase Co | Exco Technologies vs. Bank of America | Exco Technologies vs. Alphabet Inc 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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