Correlation Between Salesforce and ERAMET SA
Can any of the company-specific risk be diversified away by investing in both Salesforce and ERAMET SA 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 ERAMET SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and ERAMET SA, you can compare the effects of market volatilities on Salesforce and ERAMET SA 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 ERAMET SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and ERAMET SA.
Diversification Opportunities for Salesforce and ERAMET SA
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Salesforce and ERAMET is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and ERAMET SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ERAMET SA 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 ERAMET SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ERAMET SA has no effect on the direction of Salesforce i.e., Salesforce and ERAMET SA go up and down completely randomly.
Pair Corralation between Salesforce and ERAMET SA
Considering the 90-day investment horizon Salesforce is expected to generate 0.65 times more return on investment than ERAMET SA. However, Salesforce is 1.53 times less risky than ERAMET SA. It trades about 0.25 of its potential returns per unit of risk. ERAMET SA is currently generating about -0.08 per unit of risk. If you would invest 29,472 in Salesforce on September 2, 2024 and sell it today you would earn a total of 3,527 from holding Salesforce or generate 11.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. ERAMET SA
Performance |
| Timeline |
| Salesforce |
| ERAMET SA |
Salesforce and ERAMET SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and ERAMET SA
The main advantage of trading using opposite Salesforce and ERAMET SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, ERAMET SA 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 ERAMET SA will offset losses from the drop in ERAMET SA's long position.| Salesforce vs. Ke Holdings | Salesforce vs. nCino Inc | Salesforce vs. Kingsoft Cloud Holdings | Salesforce vs. Jfrog |
| ERAMET SA vs. Iluka Resources Ltd | ERAMET SA vs. Giyani Metals Corp | ERAMET SA vs. IGO Limited | ERAMET SA vs. Grid Metals Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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