Correlation Between Salesforce and Lear
Can any of the company-specific risk be diversified away by investing in both Salesforce and Lear 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 Lear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Lear Corporation, you can compare the effects of market volatilities on Salesforce and Lear 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 Lear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Lear.
Diversification Opportunities for Salesforce and Lear
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Salesforce and Lear is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Lear Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lear 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 Lear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lear has no effect on the direction of Salesforce i.e., Salesforce and Lear go up and down completely randomly.
Pair Corralation between Salesforce and Lear
Considering the 90-day investment horizon Salesforce is expected to generate 1.32 times more return on investment than Lear. However, Salesforce is 1.32 times more volatile than Lear Corporation. It trades about 0.04 of its potential returns per unit of risk. Lear Corporation is currently generating about -0.09 per unit of risk. If you would invest 30,746 in Salesforce on August 27, 2024 and sell it today you would earn a total of 3,456 from holding Salesforce or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Lear Corp.
Performance |
| Timeline |
| Salesforce |
| Lear |
Salesforce and Lear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Lear
The main advantage of trading using opposite Salesforce and Lear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Lear 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 Lear will offset losses from the drop in Lear's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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