Correlation Between Salesforce and Saipem SpA
Can any of the company-specific risk be diversified away by investing in both Salesforce and Saipem SpA 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 Saipem SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Saipem SpA, you can compare the effects of market volatilities on Salesforce and Saipem SpA 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 Saipem SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Saipem SpA.
Diversification Opportunities for Salesforce and Saipem SpA
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and Saipem is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Saipem SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saipem SpA 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 Saipem SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saipem SpA has no effect on the direction of Salesforce i.e., Salesforce and Saipem SpA go up and down completely randomly.
Pair Corralation between Salesforce and Saipem SpA
Considering the 90-day investment horizon Salesforce is expected to generate 2.11 times less return on investment than Saipem SpA. But when comparing it to its historical volatility, Salesforce is 2.02 times less risky than Saipem SpA. It trades about 0.07 of its potential returns per unit of risk. Saipem SpA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 151.00 in Saipem SpA on September 2, 2024 and sell it today you would earn a total of 105.00 from holding Saipem SpA or generate 69.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Saipem SpA
Performance |
| Timeline |
| Salesforce |
| Saipem SpA |
Salesforce and Saipem SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Saipem SpA
The main advantage of trading using opposite Salesforce and Saipem SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Saipem SpA 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 Saipem SpA will offset losses from the drop in Saipem SpA's long position.| Salesforce vs. Ke Holdings | Salesforce vs. nCino Inc | Salesforce vs. Kingsoft Cloud Holdings | Salesforce vs. Jfrog |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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