Correlation Between Salesforce and Imperial Brands
Can any of the company-specific risk be diversified away by investing in both Salesforce and Imperial Brands 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 Imperial Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Imperial Brands PLC, you can compare the effects of market volatilities on Salesforce and Imperial Brands 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 Imperial Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Imperial Brands.
Diversification Opportunities for Salesforce and Imperial Brands
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and Imperial is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Imperial Brands PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Brands PLC 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 Imperial Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Brands PLC has no effect on the direction of Salesforce i.e., Salesforce and Imperial Brands go up and down completely randomly.
Pair Corralation between Salesforce and Imperial Brands
Considering the 90-day investment horizon Salesforce is expected to generate 1.52 times more return on investment than Imperial Brands. However, Salesforce is 1.52 times more volatile than Imperial Brands PLC. It trades about 0.1 of its potential returns per unit of risk. Imperial Brands PLC is currently generating about 0.07 per unit of risk. If you would invest 13,053 in Salesforce on August 30, 2024 and sell it today you would earn a total of 19,948 from holding Salesforce or generate 152.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Imperial Brands PLC
Performance |
| Timeline |
| Salesforce |
| Imperial Brands PLC |
Salesforce and Imperial Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Imperial Brands
The main advantage of trading using opposite Salesforce and Imperial Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Imperial Brands 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 Imperial Brands will offset losses from the drop in Imperial Brands' long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Imperial Brands vs. Embotelladora Andina SA | Imperial Brands vs. Signet International Holdings | Imperial Brands vs. National Beverage Corp | Imperial Brands vs. PT Astra International |
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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