Correlation Between Salesforce and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Salesforce and Electronic Arts 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 Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Electronic Arts, you can compare the effects of market volatilities on Salesforce and Electronic Arts 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 Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Electronic Arts.
Diversification Opportunities for Salesforce and Electronic Arts
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Salesforce and Electronic is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts 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 Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of Salesforce i.e., Salesforce and Electronic Arts go up and down completely randomly.
Pair Corralation between Salesforce and Electronic Arts
Considering the 90-day investment horizon Salesforce is expected to generate 1.3 times more return on investment than Electronic Arts. However, Salesforce is 1.3 times more volatile than Electronic Arts. It trades about 0.16 of its potential returns per unit of risk. Electronic Arts is currently generating about 0.14 per unit of risk. If you would invest 23,588 in Salesforce on August 31, 2024 and sell it today you would earn a total of 9,411 from holding Salesforce or generate 39.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.69% |
| Values | Daily Returns |
Salesforce vs. Electronic Arts
Performance |
| Timeline |
| Salesforce |
| Electronic Arts |
Salesforce and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Electronic Arts
The main advantage of trading using opposite Salesforce and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Electronic Arts vs. Nintendo Co | Electronic Arts vs. Sea Limited | Electronic Arts vs. Take Two Interactive Software | Electronic Arts vs. Superior Plus 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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