Correlation Between Salesforce and Allstate
Can any of the company-specific risk be diversified away by investing in both Salesforce and Allstate 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 Allstate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and The Allstate, you can compare the effects of market volatilities on Salesforce and Allstate 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 Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Allstate.
Diversification Opportunities for Salesforce and Allstate
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and Allstate is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate 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 Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of Salesforce i.e., Salesforce and Allstate go up and down completely randomly.
Pair Corralation between Salesforce and Allstate
Considering the 90-day investment horizon Salesforce is expected to generate 1.21 times more return on investment than Allstate. However, Salesforce is 1.21 times more volatile than The Allstate. It trades about 0.16 of its potential returns per unit of risk. The Allstate is currently generating about 0.14 per unit of risk. If you would invest 23,588 in Salesforce on August 31, 2024 and sell it today you would earn a total of 9,411 from holding Salesforce or generate 39.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. The Allstate
Performance |
| Timeline |
| Salesforce |
| Allstate |
Salesforce and Allstate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Allstate
The main advantage of trading using opposite Salesforce and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Allstate 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 Allstate will offset losses from the drop in Allstate's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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