Correlation Between Salesforce and Exxon
Can any of the company-specific risk be diversified away by investing in both Salesforce and Exxon 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 Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and EXXON MOBIL CDR, you can compare the effects of market volatilities on Salesforce and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Exxon.
Diversification Opportunities for Salesforce and Exxon
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and Exxon is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and EXXON MOBIL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXXON MOBIL CDR 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXXON MOBIL CDR has no effect on the direction of Salesforce i.e., Salesforce and Exxon go up and down completely randomly.
Pair Corralation between Salesforce and Exxon
Considering the 90-day investment horizon Salesforce is expected to generate 1.42 times more return on investment than Exxon. However, Salesforce is 1.42 times more volatile than EXXON MOBIL CDR. It trades about 0.3 of its potential returns per unit of risk. EXXON MOBIL CDR is currently generating about 0.05 per unit of risk. If you would invest 27,664 in Salesforce on August 28, 2024 and sell it today you would earn a total of 6,654 from holding Salesforce or generate 24.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Salesforce vs. EXXON MOBIL CDR
Performance |
| Timeline |
| Salesforce |
| EXXON MOBIL CDR |
Salesforce and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Exxon
The main advantage of trading using opposite Salesforce and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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