Correlation Between Salesforce and Cocoa
Can any of the company-specific risk be diversified away by investing in both Salesforce and Cocoa 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 Cocoa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Cocoa, you can compare the effects of market volatilities on Salesforce and Cocoa 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 Cocoa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Cocoa.
Diversification Opportunities for Salesforce and Cocoa
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Salesforce and Cocoa is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Cocoa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cocoa 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 Cocoa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cocoa has no effect on the direction of Salesforce i.e., Salesforce and Cocoa go up and down completely randomly.
Pair Corralation between Salesforce and Cocoa
Considering the 90-day investment horizon Salesforce is expected to generate 2.0 times less return on investment than Cocoa. But when comparing it to its historical volatility, Salesforce is 1.79 times less risky than Cocoa. It trades about 0.08 of its potential returns per unit of risk. Cocoa is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 305,200 in Cocoa on August 26, 2024 and sell it today you would earn a total of 591,100 from holding Cocoa or generate 193.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.5% |
| Values | Daily Returns |
Salesforce vs. Cocoa
Performance |
| Timeline |
| Salesforce |
| Cocoa |
Salesforce and Cocoa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Cocoa
The main advantage of trading using opposite Salesforce and Cocoa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Cocoa 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 Cocoa will offset losses from the drop in Cocoa'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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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