Correlation Between Salesforce and Home Depot
Can any of the company-specific risk be diversified away by investing in both Salesforce and Home Depot 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 Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and The Home Depot, you can compare the effects of market volatilities on Salesforce and Home Depot 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 Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Home Depot.
Diversification Opportunities for Salesforce and Home Depot
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Salesforce and Home is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot 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 Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of Salesforce i.e., Salesforce and Home Depot go up and down completely randomly.
Pair Corralation between Salesforce and Home Depot
Considering the 90-day investment horizon Salesforce is expected to generate 1.8 times more return on investment than Home Depot. However, Salesforce is 1.8 times more volatile than The Home Depot. It trades about 0.28 of its potential returns per unit of risk. The Home Depot is currently generating about 0.45 per unit of risk. If you would invest 29,137 in Salesforce on September 1, 2024 and sell it today you would earn a total of 3,862 from holding Salesforce or generate 13.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Salesforce vs. The Home Depot
Performance |
| Timeline |
| Salesforce |
| Home Depot |
Salesforce and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Home Depot
The main advantage of trading using opposite Salesforce and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot's long position.| Salesforce vs. Ke Holdings | Salesforce vs. nCino Inc | Salesforce vs. Kingsoft Cloud Holdings | Salesforce vs. Jfrog |
| Home Depot vs. The Home Depot | Home Depot vs. HORNBACH Baumarkt AG | Home Depot vs. WICKES GROUP PLC | Home Depot vs. TOPPS TILES PLC |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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