Correlation Between Salesforce and American Beacon
Can any of the company-specific risk be diversified away by investing in both Salesforce and American Beacon 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 American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and American Beacon Select, you can compare the effects of market volatilities on Salesforce and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and American Beacon.
Diversification Opportunities for Salesforce and American Beacon
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Salesforce and American is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and American Beacon Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Select 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Select has no effect on the direction of Salesforce i.e., Salesforce and American Beacon go up and down completely randomly.
Pair Corralation between Salesforce and American Beacon
Considering the 90-day investment horizon Salesforce is expected to generate 1.74 times more return on investment than American Beacon. However, Salesforce is 1.74 times more volatile than American Beacon Select. It trades about 0.28 of its potential returns per unit of risk. American Beacon Select is currently generating about 0.28 per unit of risk. If you would invest 29,137 in Salesforce on September 1, 2024 and sell it today you would earn a total of 3,862 from holding Salesforce or generate 13.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. American Beacon Select
Performance |
| Timeline |
| Salesforce |
| American Beacon Select |
Salesforce and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and American Beacon
The main advantage of trading using opposite Salesforce and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Salesforce vs. Ke Holdings | Salesforce vs. nCino Inc | Salesforce vs. Kingsoft Cloud Holdings | Salesforce vs. Jfrog |
| American Beacon vs. First Trust Exchange Traded | American Beacon vs. Ultimus Managers Trust | American Beacon vs. Horizon Kinetics Medical | American Beacon vs. Harbor Health Care |
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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