Correlation Between Salesforce and Kingfisher PLC
Can any of the company-specific risk be diversified away by investing in both Salesforce and Kingfisher PLC 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 Kingfisher PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Kingfisher PLC ADR, you can compare the effects of market volatilities on Salesforce and Kingfisher PLC 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 Kingfisher PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Kingfisher PLC.
Diversification Opportunities for Salesforce and Kingfisher PLC
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Salesforce and Kingfisher is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Kingfisher PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingfisher PLC ADR 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 Kingfisher PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingfisher PLC ADR has no effect on the direction of Salesforce i.e., Salesforce and Kingfisher PLC go up and down completely randomly.
Pair Corralation between Salesforce and Kingfisher PLC
Considering the 90-day investment horizon Salesforce is expected to generate 0.73 times more return on investment than Kingfisher PLC. However, Salesforce is 1.37 times less risky than Kingfisher PLC. It trades about 0.21 of its potential returns per unit of risk. Kingfisher PLC ADR is currently generating about -0.32 per unit of risk. If you would invest 29,889 in Salesforce on August 30, 2024 and sell it today you would earn a total of 3,112 from holding Salesforce or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Kingfisher PLC ADR
Performance |
| Timeline |
| Salesforce |
| Kingfisher PLC ADR |
Salesforce and Kingfisher PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Kingfisher PLC
The main advantage of trading using opposite Salesforce and Kingfisher PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Kingfisher PLC 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 Kingfisher PLC will offset losses from the drop in Kingfisher PLC's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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