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 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
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and HOME is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and 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 1.23 times less return on investment than HOME DEPOT. In addition to that, Salesforce is 1.34 times more volatile than HOME DEPOT. It trades about 0.1 of its total potential returns per unit of risk. HOME DEPOT is currently generating about 0.16 per unit of volatility. If you would invest 37,800 in HOME DEPOT on November 3, 2024 and sell it today you would earn a total of 1,795 from holding HOME DEPOT or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Salesforce vs. 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. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| HOME DEPOT vs. DICKS Sporting Goods | HOME DEPOT vs. Hemisphere Energy Corp | HOME DEPOT vs. Zoom Video Communications | HOME DEPOT vs. USWE SPORTS 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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