Correlation Between Salesforce and ABSA Bank
Can any of the company-specific risk be diversified away by investing in both Salesforce and ABSA Bank 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 ABSA Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and ABSA Bank Limited, you can compare the effects of market volatilities on Salesforce and ABSA Bank 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 ABSA Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and ABSA Bank.
Diversification Opportunities for Salesforce and ABSA Bank
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Salesforce and ABSA is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and ABSA Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABSA Bank Limited 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 ABSA Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABSA Bank Limited has no effect on the direction of Salesforce i.e., Salesforce and ABSA Bank go up and down completely randomly.
Pair Corralation between Salesforce and ABSA Bank
Considering the 90-day investment horizon Salesforce is expected to generate 1.58 times more return on investment than ABSA Bank. However, Salesforce is 1.58 times more volatile than ABSA Bank Limited. It trades about 0.1 of its potential returns per unit of risk. ABSA Bank Limited is currently generating about 0.0 per unit of risk. If you would invest 13,268 in Salesforce on August 27, 2024 and sell it today you would earn a total of 20,934 from holding Salesforce or generate 157.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.99% |
| Values | Daily Returns |
Salesforce vs. ABSA Bank Limited
Performance |
| Timeline |
| Salesforce |
| ABSA Bank Limited |
Salesforce and ABSA Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and ABSA Bank
The main advantage of trading using opposite Salesforce and ABSA Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, ABSA Bank 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 ABSA Bank will offset losses from the drop in ABSA Bank's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| ABSA Bank vs. Capitec Bank Holdings | ABSA Bank vs. Capitec Bank Holdings | ABSA Bank vs. Nedbank Group | ABSA Bank vs. Investec |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |