Correlation Between Salesforce and NovaBay Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Salesforce and NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and NovaBay Pharmaceuticals, you can compare the effects of market volatilities on Salesforce and NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and NovaBay Pharmaceuticals.
Diversification Opportunities for Salesforce and NovaBay Pharmaceuticals
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and NovaBay is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and NovaBay Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NovaBay Pharmaceuticals has no effect on the direction of Salesforce i.e., Salesforce and NovaBay Pharmaceuticals go up and down completely randomly.
Pair Corralation between Salesforce and NovaBay Pharmaceuticals
Considering the 90-day investment horizon Salesforce is expected to generate 0.33 times more return on investment than NovaBay Pharmaceuticals. However, Salesforce is 3.02 times less risky than NovaBay Pharmaceuticals. It trades about 0.32 of its potential returns per unit of risk. NovaBay Pharmaceuticals is currently generating about 0.01 per unit of risk. If you would invest 27,044 in Salesforce on August 25, 2024 and sell it today you would earn a total of 7,158 from holding Salesforce or generate 26.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. NovaBay Pharmaceuticals
Performance |
| Timeline |
| Salesforce |
| NovaBay Pharmaceuticals |
Salesforce and NovaBay Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and NovaBay Pharmaceuticals
The main advantage of trading using opposite Salesforce and NovaBay Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals will offset losses from the drop in NovaBay Pharmaceuticals' long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| NovaBay Pharmaceuticals vs. Immix Biopharma | NovaBay Pharmaceuticals vs. Cns Pharmaceuticals | NovaBay Pharmaceuticals vs. Sonnet Biotherapeutics Holdings | NovaBay Pharmaceuticals vs. ZyVersa Therapeutics |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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