Correlation Between Salesforce and BERKSHIRE

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Can any of the company-specific risk be diversified away by investing in both Salesforce and BERKSHIRE 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 BERKSHIRE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and BERKSHIRE HATHAWAY FIN, you can compare the effects of market volatilities on Salesforce and BERKSHIRE 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 BERKSHIRE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and BERKSHIRE.

Diversification Opportunities for Salesforce and BERKSHIRE

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between Salesforce and BERKSHIRE is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and BERKSHIRE HATHAWAY FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BERKSHIRE HATHAWAY FIN 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 BERKSHIRE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BERKSHIRE HATHAWAY FIN has no effect on the direction of Salesforce i.e., Salesforce and BERKSHIRE go up and down completely randomly.

Pair Corralation between Salesforce and BERKSHIRE

Considering the 90-day investment horizon Salesforce is expected to generate 1.77 times more return on investment than BERKSHIRE. However, Salesforce is 1.77 times more volatile than BERKSHIRE HATHAWAY FIN. It trades about 0.07 of its potential returns per unit of risk. BERKSHIRE HATHAWAY FIN is currently generating about 0.03 per unit of risk. If you would invest  22,431  in Salesforce on September 3, 2024 and sell it today you would earn a total of  10,568  from holding Salesforce or generate 47.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.68%
ValuesDaily Returns

Salesforce  vs.  BERKSHIRE HATHAWAY FIN

 Performance 
       Timeline  
Salesforce 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.
BERKSHIRE HATHAWAY FIN 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in BERKSHIRE HATHAWAY FIN are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BERKSHIRE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Salesforce and BERKSHIRE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Salesforce and BERKSHIRE

The main advantage of trading using opposite Salesforce and BERKSHIRE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, BERKSHIRE 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 BERKSHIRE will offset losses from the drop in BERKSHIRE's long position.
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The idea behind Salesforce and BERKSHIRE HATHAWAY FIN pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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