Correlation Between Salesforce and Centrica PLC
Can any of the company-specific risk be diversified away by investing in both Salesforce and Centrica 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 Centrica PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Centrica PLC, you can compare the effects of market volatilities on Salesforce and Centrica 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 Centrica PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Centrica PLC.
Diversification Opportunities for Salesforce and Centrica PLC
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Salesforce and Centrica is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Centrica PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrica 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 Centrica PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrica PLC has no effect on the direction of Salesforce i.e., Salesforce and Centrica PLC go up and down completely randomly.
Pair Corralation between Salesforce and Centrica PLC
Considering the 90-day investment horizon Salesforce is expected to generate 2.14 times more return on investment than Centrica PLC. However, Salesforce is 2.14 times more volatile than Centrica PLC. It trades about 0.23 of its potential returns per unit of risk. Centrica PLC is currently generating about 0.43 per unit of risk. If you would invest 29,801 in Salesforce on September 3, 2024 and sell it today you would earn a total of 3,198 from holding Salesforce or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Salesforce vs. Centrica PLC
Performance |
| Timeline |
| Salesforce |
| Centrica PLC |
Salesforce and Centrica PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Centrica PLC
The main advantage of trading using opposite Salesforce and Centrica PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Centrica 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 Centrica PLC will offset losses from the drop in Centrica PLC's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Centrica PLC vs. Fresenius Medical Care | Centrica PLC vs. Playtech Plc | Centrica PLC vs. Arcticzymes Technologies ASA | Centrica PLC vs. Allianz Technology Trust |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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