Correlation Between Salesforce and Starbucks
Can any of the company-specific risk be diversified away by investing in both Salesforce and Starbucks 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 Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Starbucks, you can compare the effects of market volatilities on Salesforce and Starbucks 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 Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Starbucks.
Diversification Opportunities for Salesforce and Starbucks
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Salesforce and Starbucks is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks 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 Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Salesforce i.e., Salesforce and Starbucks go up and down completely randomly.
Pair Corralation between Salesforce and Starbucks
Considering the 90-day investment horizon Salesforce is expected to generate 1.54 times more return on investment than Starbucks. However, Salesforce is 1.54 times more volatile than Starbucks. It trades about 0.25 of its potential returns per unit of risk. Starbucks is currently generating about 0.24 per unit of risk. If you would invest 29,472 in Salesforce on September 2, 2024 and sell it today you would earn a total of 3,527 from holding Salesforce or generate 11.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Salesforce vs. Starbucks
Performance |
| Timeline |
| Salesforce |
| Starbucks |
Salesforce and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Starbucks
The main advantage of trading using opposite Salesforce and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Starbucks 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 Starbucks will offset losses from the drop in Starbucks' long position.| Salesforce vs. Ke Holdings | Salesforce vs. nCino Inc | Salesforce vs. Kingsoft Cloud Holdings | Salesforce vs. Jfrog |
| Starbucks vs. Food Life Companies | Starbucks vs. Cal Maine Foods | Starbucks vs. Performance Food Group | Starbucks vs. TYSON FOODS A |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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