Correlation Between Ford and Salesforce
Can any of the company-specific risk be diversified away by investing in both Ford and Salesforce 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 Ford and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Salesforce, you can compare the effects of market volatilities on Ford and Salesforce 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 Ford with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Salesforce.
Diversification Opportunities for Ford and Salesforce
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Salesforce is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Ford 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 Ford Motor are associated (or correlated) with Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Ford i.e., Ford and Salesforce go up and down completely randomly.
Pair Corralation between Ford and Salesforce
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Salesforce. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.0 times less risky than Salesforce. The stock trades about 0.0 of its potential returns per unit of risk. The Salesforce is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 26,899 in Salesforce on August 23, 2024 and sell it today you would earn a total of 5,671 from holding Salesforce or generate 21.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Salesforce
Performance |
| Timeline |
| Ford Motor |
| Salesforce |
Ford and Salesforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Salesforce
The main advantage of trading using opposite Ford and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Salesforce 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 Salesforce will offset losses from the drop in Salesforce's long position.The idea behind Ford Motor and Salesforce 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.| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Stocks Directory Find actively traded stocks across global markets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |