Correlation Between Salesforce and Lonza Group
Can any of the company-specific risk be diversified away by investing in both Salesforce and Lonza Group 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 Lonza Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Lonza Group AG, you can compare the effects of market volatilities on Salesforce and Lonza Group 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 Lonza Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Lonza Group.
Diversification Opportunities for Salesforce and Lonza Group
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Salesforce and Lonza is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Lonza Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lonza Group AG 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 Lonza Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lonza Group AG has no effect on the direction of Salesforce i.e., Salesforce and Lonza Group go up and down completely randomly.
Pair Corralation between Salesforce and Lonza Group
Considering the 90-day investment horizon Salesforce is expected to generate 0.97 times more return on investment than Lonza Group. However, Salesforce is 1.03 times less risky than Lonza Group. It trades about 0.35 of its potential returns per unit of risk. Lonza Group AG is currently generating about -0.06 per unit of risk. If you would invest 29,377 in Salesforce on August 29, 2024 and sell it today you would earn a total of 4,941 from holding Salesforce or generate 16.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Lonza Group AG
Performance |
| Timeline |
| Salesforce |
| Lonza Group AG |
Salesforce and Lonza Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Lonza Group
The main advantage of trading using opposite Salesforce and Lonza Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Lonza Group 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 Lonza Group will offset losses from the drop in Lonza Group's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Lonza Group vs. Sika AG | Lonza Group vs. Givaudan SA | Lonza Group vs. Geberit AG | Lonza Group vs. Swiss Life Holding |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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