Correlation Between Salesforce and 50249AAF0

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Can any of the company-specific risk be diversified away by investing in both Salesforce and 50249AAF0 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 50249AAF0 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and LYB 125 01 OCT 25, you can compare the effects of market volatilities on Salesforce and 50249AAF0 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 50249AAF0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and 50249AAF0.

Diversification Opportunities for Salesforce and 50249AAF0

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Salesforce and 50249AAF0 is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and LYB 125 01 OCT 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYB 125 01 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 50249AAF0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LYB 125 01 has no effect on the direction of Salesforce i.e., Salesforce and 50249AAF0 go up and down completely randomly.

Pair Corralation between Salesforce and 50249AAF0

Considering the 90-day investment horizon Salesforce is expected to generate 1.4 times more return on investment than 50249AAF0. However, Salesforce is 1.4 times more volatile than LYB 125 01 OCT 25. It trades about 0.36 of its potential returns per unit of risk. LYB 125 01 OCT 25 is currently generating about -0.1 per unit of risk. If you would invest  29,377  in Salesforce on August 27, 2024 and sell it today you would earn a total of  4,825  from holding Salesforce or generate 16.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Salesforce  vs.  LYB 125 01 OCT 25

 Performance 
       Timeline  
Salesforce 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 19 (%) 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.
LYB 125 01 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LYB 125 01 OCT 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 50249AAF0 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Salesforce and 50249AAF0 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Salesforce and 50249AAF0

The main advantage of trading using opposite Salesforce and 50249AAF0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, 50249AAF0 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 50249AAF0 will offset losses from the drop in 50249AAF0's long position.
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The idea behind Salesforce and LYB 125 01 OCT 25 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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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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