Correlation Between Salesforce and BASE
Can any of the company-specific risk be diversified away by investing in both Salesforce and BASE 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 BASE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and BASE Inc, you can compare the effects of market volatilities on Salesforce and BASE 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 BASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and BASE.
Diversification Opportunities for Salesforce and BASE
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Salesforce and BASE is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and BASE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASE Inc 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 BASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASE Inc has no effect on the direction of Salesforce i.e., Salesforce and BASE go up and down completely randomly.
Pair Corralation between Salesforce and BASE
Considering the 90-day investment horizon Salesforce is expected to generate 2.0 times less return on investment than BASE. But when comparing it to its historical volatility, Salesforce is 1.87 times less risky than BASE. It trades about 0.38 of its potential returns per unit of risk. BASE Inc is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 126.00 in BASE Inc on August 24, 2024 and sell it today you would earn a total of 46.00 from holding BASE Inc or generate 36.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Salesforce vs. BASE Inc
Performance |
| Timeline |
| Salesforce |
| BASE Inc |
Salesforce and BASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and BASE
The main advantage of trading using opposite Salesforce and BASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, BASE 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 BASE will offset losses from the drop in BASE'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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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