Correlation Between Salesforce and IShares CMBS

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Can any of the company-specific risk be diversified away by investing in both Salesforce and IShares CMBS 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 IShares CMBS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and iShares CMBS ETF, you can compare the effects of market volatilities on Salesforce and IShares CMBS 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 IShares CMBS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and IShares CMBS.

Diversification Opportunities for Salesforce and IShares CMBS

SalesforceISharesDiversified AwaySalesforceISharesDiversified Away100%
0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Salesforce and IShares is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and iShares CMBS ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares CMBS ETF 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 IShares CMBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares CMBS ETF has no effect on the direction of Salesforce i.e., Salesforce and IShares CMBS go up and down completely randomly.

Pair Corralation between Salesforce and IShares CMBS

Considering the 90-day investment horizon Salesforce is expected to generate 7.51 times more return on investment than IShares CMBS. However, Salesforce is 7.51 times more volatile than iShares CMBS ETF. It trades about 0.04 of its potential returns per unit of risk. iShares CMBS ETF is currently generating about 0.1 per unit of risk. If you would invest  27,457  in Salesforce on November 24, 2024 and sell it today you would earn a total of  3,523  from holding Salesforce or generate 12.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Salesforce  vs.  iShares CMBS ETF

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15CRM CMBS
       Timeline  
Salesforce 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb310320330340350360
iShares CMBS ETF 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in iShares CMBS ETF are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, IShares CMBS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb46.646.84747.247.447.647.848

Salesforce and IShares CMBS Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.53-2.65-1.76-0.870.00.841.72.553.41 1234
JavaScript chart by amCharts 3.21.15CRM CMBS
       Returns  

Pair Trading with Salesforce and IShares CMBS

The main advantage of trading using opposite Salesforce and IShares CMBS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, IShares CMBS 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 IShares CMBS will offset losses from the drop in IShares CMBS's long position.
The idea behind Salesforce and iShares CMBS ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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