Correlation Between Salesforce and Bath Body
Can any of the company-specific risk be diversified away by investing in both Salesforce and Bath Body 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 Bath Body into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Bath Body Works, you can compare the effects of market volatilities on Salesforce and Bath Body 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 Bath Body. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Bath Body.
Diversification Opportunities for Salesforce and Bath Body
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and Bath is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Bath Body Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bath Body Works 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 Salesforce are associated (or correlated) with Bath Body. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bath Body Works has no effect on the direction of Salesforce i.e., Salesforce and Bath Body go up and down completely randomly.
Pair Corralation between Salesforce and Bath Body
Considering the 90-day investment horizon Salesforce is expected to generate 0.91 times more return on investment than Bath Body. However, Salesforce is 1.09 times less risky than Bath Body. It trades about -0.02 of its potential returns per unit of risk. Bath Body Works is currently generating about -0.11 per unit of risk. If you would invest 33,574 in Salesforce on October 29, 2024 and sell it today you would lose (186.00) from holding Salesforce or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Salesforce vs. Bath Body Works
Performance |
| Timeline |
| Salesforce |
| Bath Body Works |
Salesforce and Bath Body Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Bath Body
The main advantage of trading using opposite Salesforce and Bath Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Bath Body 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 Bath Body will offset losses from the drop in Bath Body's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Bath Body vs. Gaztransport et Technigaz | Bath Body vs. Sabre Insurance Group | Bath Body vs. Clean Power Hydrogen | Bath Body vs. Morgan Advanced Materials |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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