Correlation Between Salesforce and Ally Financial
Can any of the company-specific risk be diversified away by investing in both Salesforce and Ally Financial 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 Ally Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Ally Financial, you can compare the effects of market volatilities on Salesforce and Ally Financial 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 Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Ally Financial.
Diversification Opportunities for Salesforce and Ally Financial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and Ally is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial 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 Ally Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Financial has no effect on the direction of Salesforce i.e., Salesforce and Ally Financial go up and down completely randomly.
Pair Corralation between Salesforce and Ally Financial
Considering the 90-day investment horizon Salesforce is expected to under-perform the Ally Financial. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.83 times less risky than Ally Financial. The stock trades about -0.06 of its potential returns per unit of risk. The Ally Financial is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 3,442 in Ally Financial on October 28, 2024 and sell it today you would earn a total of 373.00 from holding Ally Financial or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Salesforce vs. Ally Financial
Performance |
| Timeline |
| Salesforce |
| Ally Financial |
Salesforce and Ally Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Ally Financial
The main advantage of trading using opposite Salesforce and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Ally Financial 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 Ally Financial will offset losses from the drop in Ally Financial's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Ally Financial vs. DIVERSIFIED ROYALTY | Ally Financial vs. Federal Home Loan | Ally Financial vs. Hoist Finance AB |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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