Correlation Between Salesforce and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Salesforce and ArcelorMittal 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 ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and ArcelorMittal SA, you can compare the effects of market volatilities on Salesforce and ArcelorMittal 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 ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and ArcelorMittal.
Diversification Opportunities for Salesforce and ArcelorMittal
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and ArcelorMittal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and ArcelorMittal SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA 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 ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA has no effect on the direction of Salesforce i.e., Salesforce and ArcelorMittal go up and down completely randomly.
Pair Corralation between Salesforce and ArcelorMittal
Considering the 90-day investment horizon Salesforce is expected to generate 1.32 times less return on investment than ArcelorMittal. But when comparing it to its historical volatility, Salesforce is 1.69 times less risky than ArcelorMittal. It trades about 0.34 of its potential returns per unit of risk. ArcelorMittal SA is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,260 in ArcelorMittal SA on August 28, 2024 and sell it today you would earn a total of 250.00 from holding ArcelorMittal SA or generate 11.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 57.14% |
| Values | Daily Returns |
Salesforce vs. ArcelorMittal SA
Performance |
| Timeline |
| Salesforce |
| ArcelorMittal SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Salesforce and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and ArcelorMittal
The main advantage of trading using opposite Salesforce and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| ArcelorMittal vs. Olympic Steel | ArcelorMittal vs. Mesabi Trust | ArcelorMittal vs. Universal Stainless Alloy | ArcelorMittal vs. POSCO Holdings |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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