Correlation Between Salesforce and Raytheon Technologies
Can any of the company-specific risk be diversified away by investing in both Salesforce and Raytheon Technologies 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 Raytheon Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Raytheon Technologies, you can compare the effects of market volatilities on Salesforce and Raytheon Technologies 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 Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Raytheon Technologies.
Diversification Opportunities for Salesforce and Raytheon Technologies
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Salesforce and Raytheon is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Raytheon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies 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 Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of Salesforce i.e., Salesforce and Raytheon Technologies go up and down completely randomly.
Pair Corralation between Salesforce and Raytheon Technologies
Considering the 90-day investment horizon Salesforce is expected to generate 1.13 times more return on investment than Raytheon Technologies. However, Salesforce is 1.13 times more volatile than Raytheon Technologies. It trades about 0.21 of its potential returns per unit of risk. Raytheon Technologies is currently generating about 0.04 per unit of risk. If you would invest 29,889 in Salesforce on August 30, 2024 and sell it today you would earn a total of 3,112 from holding Salesforce or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Salesforce vs. Raytheon Technologies
Performance |
| Timeline |
| Salesforce |
| Raytheon Technologies |
Salesforce and Raytheon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Raytheon Technologies
The main advantage of trading using opposite Salesforce and Raytheon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Raytheon Technologies 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 Raytheon Technologies will offset losses from the drop in Raytheon Technologies' long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Raytheon Technologies vs. Tyson Foods | Raytheon Technologies vs. Extra Space Storage | Raytheon Technologies vs. CM Hospitalar SA | Raytheon Technologies vs. Verizon Communications |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |