Correlation Between Salesforce and WW Grainger
Can any of the company-specific risk be diversified away by investing in both Salesforce and WW Grainger 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 WW Grainger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and WW Grainger, you can compare the effects of market volatilities on Salesforce and WW Grainger 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 WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and WW Grainger.
Diversification Opportunities for Salesforce and WW Grainger
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Salesforce and GWW is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger 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 WW Grainger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW Grainger has no effect on the direction of Salesforce i.e., Salesforce and WW Grainger go up and down completely randomly.
Pair Corralation between Salesforce and WW Grainger
Considering the 90-day investment horizon Salesforce is expected to generate 1.18 times more return on investment than WW Grainger. However, Salesforce is 1.18 times more volatile than WW Grainger. It trades about 0.38 of its potential returns per unit of risk. WW Grainger is currently generating about 0.24 per unit of risk. If you would invest 28,443 in Salesforce on August 24, 2024 and sell it today you would earn a total of 5,135 from holding Salesforce or generate 18.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. WW Grainger
Performance |
| Timeline |
| Salesforce |
| WW Grainger |
Salesforce and WW Grainger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and WW Grainger
The main advantage of trading using opposite Salesforce and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, WW Grainger 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 WW Grainger will offset losses from the drop in WW Grainger's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| WW Grainger vs. Watsco Inc | WW Grainger vs. Pool Corporation | WW Grainger vs. MSC Industrial Direct | WW Grainger vs. Applied Industrial Technologies |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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