Correlation Between Salesforce and American Tower
Can any of the company-specific risk be diversified away by investing in both Salesforce and American Tower 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 American Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and American Tower, you can compare the effects of market volatilities on Salesforce and American Tower 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 American Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and American Tower.
Diversification Opportunities for Salesforce and American Tower
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Salesforce and American is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and American Tower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Tower 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 American Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Tower has no effect on the direction of Salesforce i.e., Salesforce and American Tower go up and down completely randomly.
Pair Corralation between Salesforce and American Tower
Considering the 90-day investment horizon Salesforce is expected to under-perform the American Tower. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.02 times less risky than American Tower. The stock trades about -0.3 of its potential returns per unit of risk. The American Tower is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,730 in American Tower on November 28, 2024 and sell it today you would earn a total of 160.00 from holding American Tower or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. American Tower
Performance |
| Timeline |
| Salesforce |
| American Tower |
Salesforce and American Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and American Tower
The main advantage of trading using opposite Salesforce and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, American Tower 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 American Tower will offset losses from the drop in American Tower's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| American Tower vs. Fresenius Medical Care | American Tower vs. Bemobi Mobile Tech | American Tower vs. Guidewire Software, | American Tower vs. Delta Air Lines |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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