Correlation Between Salesforce and Hyatt Hotels
Can any of the company-specific risk be diversified away by investing in both Salesforce and Hyatt Hotels 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 Hyatt Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Hyatt Hotels, you can compare the effects of market volatilities on Salesforce and Hyatt Hotels 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 Hyatt Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Hyatt Hotels.
Diversification Opportunities for Salesforce and Hyatt Hotels
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Salesforce and Hyatt is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Hyatt Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyatt Hotels 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 Hyatt Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyatt Hotels has no effect on the direction of Salesforce i.e., Salesforce and Hyatt Hotels go up and down completely randomly.
Pair Corralation between Salesforce and Hyatt Hotels
Assuming the 90 days trading horizon Salesforce is expected to generate 1.16 times more return on investment than Hyatt Hotels. However, Salesforce is 1.16 times more volatile than Hyatt Hotels. It trades about 0.24 of its potential returns per unit of risk. Hyatt Hotels is currently generating about 0.11 per unit of risk. If you would invest 25,370 in Salesforce on September 3, 2024 and sell it today you would earn a total of 6,035 from holding Salesforce or generate 23.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Hyatt Hotels
Performance |
| Timeline |
| Salesforce |
| Hyatt Hotels |
Salesforce and Hyatt Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Hyatt Hotels
The main advantage of trading using opposite Salesforce and Hyatt Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Hyatt Hotels 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 Hyatt Hotels will offset losses from the drop in Hyatt Hotels' long position.| Salesforce vs. Rocket Internet SE | Salesforce vs. Superior Plus Corp | Salesforce vs. NMI Holdings | Salesforce vs. Origin Agritech |
| Hyatt Hotels vs. Dairy Farm International | Hyatt Hotels vs. Eidesvik Offshore ASA | Hyatt Hotels vs. Nufarm Limited | Hyatt Hotels vs. BW OFFSHORE LTD |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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