Correlation Between Salesforce and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both Salesforce and Sensient 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 Sensient Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Sensient Technologies, you can compare the effects of market volatilities on Salesforce and Sensient 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 Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Sensient Technologies.
Diversification Opportunities for Salesforce and Sensient Technologies
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Salesforce and Sensient is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient 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 Sensient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensient Technologies has no effect on the direction of Salesforce i.e., Salesforce and Sensient Technologies go up and down completely randomly.
Pair Corralation between Salesforce and Sensient Technologies
Considering the 90-day investment horizon Salesforce is expected to generate 1.25 times more return on investment than Sensient Technologies. However, Salesforce is 1.25 times more volatile than Sensient Technologies. It trades about 0.1 of its potential returns per unit of risk. Sensient Technologies is currently generating about 0.02 per unit of risk. If you would invest 13,268 in Salesforce on August 27, 2024 and sell it today you would earn a total of 20,934 from holding Salesforce or generate 157.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Sensient Technologies
Performance |
| Timeline |
| Salesforce |
| Sensient Technologies |
Salesforce and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Sensient Technologies
The main advantage of trading using opposite Salesforce and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Sensient 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 Sensient Technologies will offset losses from the drop in Sensient Technologies' long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller | Sensient Technologies vs. Northern Technologies | Sensient Technologies vs. Cabot |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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