Correlation Between Salesforce and Dan Hotels
Can any of the company-specific risk be diversified away by investing in both Salesforce and Dan Hotels 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 Dan Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Dan Hotels, you can compare the effects of market volatilities on Salesforce and Dan Hotels 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 Dan Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Dan Hotels.
Diversification Opportunities for Salesforce and Dan Hotels
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Salesforce and Dan is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Dan Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dan Hotels 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 Dan Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dan Hotels has no effect on the direction of Salesforce i.e., Salesforce and Dan Hotels go up and down completely randomly.
Pair Corralation between Salesforce and Dan Hotels
Considering the 90-day investment horizon Salesforce is expected to generate 1.37 times more return on investment than Dan Hotels. However, Salesforce is 1.37 times more volatile than Dan Hotels. It trades about 0.35 of its potential returns per unit of risk. Dan Hotels is currently generating about -0.08 per unit of risk. If you would invest 29,377 in Salesforce on August 29, 2024 and sell it today you would earn a total of 4,941 from holding Salesforce or generate 16.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 82.61% |
| Values | Daily Returns |
Salesforce vs. Dan Hotels
Performance |
| Timeline |
| Salesforce |
| Dan Hotels |
Salesforce and Dan Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Dan Hotels
The main advantage of trading using opposite Salesforce and Dan Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Dan Hotels 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 Dan Hotels will offset losses from the drop in Dan Hotels' long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Dan Hotels vs. Clal Insurance Enterprises | Dan Hotels vs. Israel Discount Bank | Dan Hotels vs. Bezeq Israeli Telecommunication | Dan Hotels vs. Alony Hetz Properties |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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