Correlation Between Salesforce and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Salesforce and Berkshire Hathaway 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 Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Berkshire Hathaway, you can compare the effects of market volatilities on Salesforce and Berkshire Hathaway 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 Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Berkshire Hathaway.
Diversification Opportunities for Salesforce and Berkshire Hathaway
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Salesforce and Berkshire is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway 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 Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Salesforce i.e., Salesforce and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Salesforce and Berkshire Hathaway
Considering the 90-day investment horizon Salesforce is expected to generate 1.43 times more return on investment than Berkshire Hathaway. However, Salesforce is 1.43 times more volatile than Berkshire Hathaway. It trades about 0.38 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.16 per unit of risk. If you would invest 29,046 in Salesforce on August 26, 2024 and sell it today you would earn a total of 5,156 from holding Salesforce or generate 17.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Berkshire Hathaway
Performance |
| Timeline |
| Salesforce |
| Berkshire Hathaway |
Salesforce and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Berkshire Hathaway
The main advantage of trading using opposite Salesforce and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway'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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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