Correlation Between Salesforce and Ford
Can any of the company-specific risk be diversified away by investing in both Salesforce and Ford 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 Ford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Ford Motor, you can compare the effects of market volatilities on Salesforce and Ford 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 Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Ford.
Diversification Opportunities for Salesforce and Ford
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Salesforce and Ford is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor 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 Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of Salesforce i.e., Salesforce and Ford go up and down completely randomly.
Pair Corralation between Salesforce and Ford
Considering the 90-day investment horizon Salesforce is expected to generate 0.88 times more return on investment than Ford. However, Salesforce is 1.14 times less risky than Ford. It trades about 0.1 of its potential returns per unit of risk. Ford Motor is currently generating about 0.01 per unit of risk. If you would invest 13,334 in Salesforce on August 26, 2024 and sell it today you would earn a total of 20,868 from holding Salesforce or generate 156.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Ford Motor
Performance |
| Timeline |
| Salesforce |
| Ford Motor |
Salesforce and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Ford
The main advantage of trading using opposite Salesforce and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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