Correlation Between Salesforce and Bill Holdings
Can any of the company-specific risk be diversified away by investing in both Salesforce and Bill Holdings 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 Bill Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Bill Holdings, you can compare the effects of market volatilities on Salesforce and Bill Holdings 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 Bill Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Bill Holdings.
Diversification Opportunities for Salesforce and Bill Holdings
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Salesforce and Bill is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Bill Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bill Holdings 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 Bill Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bill Holdings has no effect on the direction of Salesforce i.e., Salesforce and Bill Holdings go up and down completely randomly.
Pair Corralation between Salesforce and Bill Holdings
Assuming the 90 days horizon Salesforce is expected to generate 2.19 times less return on investment than Bill Holdings. But when comparing it to its historical volatility, Salesforce is 1.75 times less risky than Bill Holdings. It trades about 0.26 of its potential returns per unit of risk. Bill Holdings is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 4,276 in Bill Holdings on August 26, 2024 and sell it today you would earn a total of 4,404 from holding Bill Holdings or generate 102.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Bill Holdings
Performance |
| Timeline |
| Salesforce |
| Bill Holdings |
Salesforce and Bill Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Bill Holdings
The main advantage of trading using opposite Salesforce and Bill Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Bill Holdings 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 Bill Holdings will offset losses from the drop in Bill Holdings' long position.The idea behind Salesforce and Bill Holdings 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.| Bill Holdings vs. PKSHA TECHNOLOGY INC | Bill Holdings vs. GLG LIFE TECH | Bill Holdings vs. NetSol Technologies | Bill Holdings vs. INTERSHOP Communications Aktiengesellschaft |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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