Correlation Between Salesforce and Vodafone Group
Can any of the company-specific risk be diversified away by investing in both Salesforce and Vodafone Group 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 Vodafone Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Vodafone Group Plc, you can compare the effects of market volatilities on Salesforce and Vodafone Group 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 Vodafone Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Vodafone Group.
Diversification Opportunities for Salesforce and Vodafone Group
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Salesforce and Vodafone is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Vodafone Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodafone Group Plc 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 Vodafone Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodafone Group Plc has no effect on the direction of Salesforce i.e., Salesforce and Vodafone Group go up and down completely randomly.
Pair Corralation between Salesforce and Vodafone Group
Considering the 90-day investment horizon Salesforce is expected to generate 1.12 times more return on investment than Vodafone Group. However, Salesforce is 1.12 times more volatile than Vodafone Group Plc. It trades about 0.23 of its potential returns per unit of risk. Vodafone Group Plc is currently generating about -0.01 per unit of risk. If you would invest 29,640 in Salesforce on August 31, 2024 and sell it today you would earn a total of 3,361 from holding Salesforce or generate 11.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Salesforce vs. Vodafone Group Plc
Performance |
| Timeline |
| Salesforce |
| Vodafone Group Plc |
Salesforce and Vodafone Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Vodafone Group
The main advantage of trading using opposite Salesforce and Vodafone Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Vodafone Group 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 Vodafone Group will offset losses from the drop in Vodafone Group's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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