Correlation Between Salesforce and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Salesforce and Federated Hermes 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 Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Federated Hermes Ultrashort, you can compare the effects of market volatilities on Salesforce and Federated Hermes 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 Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Federated Hermes.
Diversification Opportunities for Salesforce and Federated Hermes
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and Federated is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Federated Hermes Ultrashort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Ult 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 Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Ult has no effect on the direction of Salesforce i.e., Salesforce and Federated Hermes go up and down completely randomly.
Pair Corralation between Salesforce and Federated Hermes
Considering the 90-day investment horizon Salesforce is expected to generate 19.97 times more return on investment than Federated Hermes. However, Salesforce is 19.97 times more volatile than Federated Hermes Ultrashort. It trades about 0.24 of its potential returns per unit of risk. Federated Hermes Ultrashort is currently generating about 0.17 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 3,624 from holding Salesforce or generate 12.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Federated Hermes Ultrashort
Performance |
| Timeline |
| Salesforce |
| Federated Hermes Ult |
Salesforce and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Federated Hermes
The main advantage of trading using opposite Salesforce and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Federated Hermes 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 Federated Hermes will offset losses from the drop in Federated Hermes' long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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