Correlation Between Salesforce and PayPal Holdings
Can any of the company-specific risk be diversified away by investing in both Salesforce and PayPal Holdings 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 PayPal Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and PayPal Holdings, you can compare the effects of market volatilities on Salesforce and PayPal Holdings 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 PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and PayPal Holdings.
Diversification Opportunities for Salesforce and PayPal Holdings
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Salesforce and PayPal is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings 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 PayPal Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PayPal Holdings has no effect on the direction of Salesforce i.e., Salesforce and PayPal Holdings go up and down completely randomly.
Pair Corralation between Salesforce and PayPal Holdings
Considering the 90-day investment horizon Salesforce is expected to generate 1.04 times more return on investment than PayPal Holdings. However, Salesforce is 1.04 times more volatile than PayPal Holdings. It trades about 0.36 of its potential returns per unit of risk. PayPal Holdings is currently generating about 0.1 per unit of risk. If you would invest 29,377 in Salesforce on August 27, 2024 and sell it today you would earn a total of 4,825 from holding Salesforce or generate 16.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. PayPal Holdings
Performance |
| Timeline |
| Salesforce |
| PayPal Holdings |
Salesforce and PayPal Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and PayPal Holdings
The main advantage of trading using opposite Salesforce and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, PayPal Holdings 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 PayPal Holdings will offset losses from the drop in PayPal Holdings' long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| PayPal Holdings vs. American Express | PayPal Holdings vs. Morningstar Unconstrained Allocation | PayPal Holdings vs. Sitka Gold Corp | PayPal Holdings vs. MSCI ACWI exAUCONSUMER |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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