Correlation Between Salesforce and Alcon AG
Can any of the company-specific risk be diversified away by investing in both Salesforce and Alcon AG 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 Alcon AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Alcon AG, you can compare the effects of market volatilities on Salesforce and Alcon AG 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 Alcon AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Alcon AG.
Diversification Opportunities for Salesforce and Alcon AG
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Salesforce and Alcon is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Alcon AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcon AG 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 Alcon AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcon AG has no effect on the direction of Salesforce i.e., Salesforce and Alcon AG go up and down completely randomly.
Pair Corralation between Salesforce and Alcon AG
Considering the 90-day investment horizon Salesforce is expected to generate 1.4 times more return on investment than Alcon AG. However, Salesforce is 1.4 times more volatile than Alcon AG. It trades about 0.34 of its potential returns per unit of risk. Alcon AG is currently generating about -0.3 per unit of risk. If you would invest 29,377 in Salesforce on August 28, 2024 and sell it today you would earn a total of 4,534 from holding Salesforce or generate 15.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Alcon AG
Performance |
| Timeline |
| Salesforce |
| Alcon AG |
Salesforce and Alcon AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Alcon AG
The main advantage of trading using opposite Salesforce and Alcon AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Alcon AG 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 Alcon AG will offset losses from the drop in Alcon AG's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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