Correlation Between Salesforce and Pacific Health
Can any of the company-specific risk be diversified away by investing in both Salesforce and Pacific Health 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 Pacific Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Pacific Health Care, you can compare the effects of market volatilities on Salesforce and Pacific Health 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 Pacific Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Pacific Health.
Diversification Opportunities for Salesforce and Pacific Health
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Salesforce and Pacific is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Pacific Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Health Care 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 Pacific Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Health Care has no effect on the direction of Salesforce i.e., Salesforce and Pacific Health go up and down completely randomly.
Pair Corralation between Salesforce and Pacific Health
Considering the 90-day investment horizon Salesforce is expected to generate 0.59 times more return on investment than Pacific Health. However, Salesforce is 1.7 times less risky than Pacific Health. It trades about 0.06 of its potential returns per unit of risk. Pacific Health Care is currently generating about 0.01 per unit of risk. If you would invest 17,454 in Salesforce on December 2, 2024 and sell it today you would earn a total of 12,331 from holding Salesforce or generate 70.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.75% |
| Values | Daily Returns |
Salesforce vs. Pacific Health Care
Performance |
| Timeline |
| Salesforce |
| Pacific Health Care |
Salesforce and Pacific Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Pacific Health
The main advantage of trading using opposite Salesforce and Pacific Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Pacific Health 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 Pacific Health will offset losses from the drop in Pacific Health's long position.| Salesforce vs. Zoom Video Communications | ||
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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