Correlation Between Salesforce and BP Plc
Can any of the company-specific risk be diversified away by investing in both Salesforce and BP Plc 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 BP Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and BP plc, you can compare the effects of market volatilities on Salesforce and BP Plc 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 BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and BP Plc.
Diversification Opportunities for Salesforce and BP Plc
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Salesforce and BP-A is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc 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 BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of Salesforce i.e., Salesforce and BP Plc go up and down completely randomly.
Pair Corralation between Salesforce and BP Plc
Considering the 90-day investment horizon Salesforce is expected to generate 1.46 times more return on investment than BP Plc. However, Salesforce is 1.46 times more volatile than BP plc. It trades about 0.06 of its potential returns per unit of risk. BP plc is currently generating about -0.02 per unit of risk. If you would invest 17,454 in Salesforce on December 2, 2024 and sell it today you would earn a total of 12,331 from holding Salesforce or generate 70.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 93.54% |
| Values | Daily Returns |
Salesforce vs. BP plc
Performance |
| Timeline |
| Salesforce |
| BP plc |
Salesforce and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and BP Plc
The main advantage of trading using opposite Salesforce and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.| Salesforce vs. Zoom Video Communications | ||
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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