Correlation Between Salesforce and HANOVER INSURANCE
Can any of the company-specific risk be diversified away by investing in both Salesforce and HANOVER INSURANCE 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 HANOVER INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and HANOVER INSURANCE, you can compare the effects of market volatilities on Salesforce and HANOVER INSURANCE 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 HANOVER INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and HANOVER INSURANCE.
Diversification Opportunities for Salesforce and HANOVER INSURANCE
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Salesforce and HANOVER is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and HANOVER INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANOVER INSURANCE 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 HANOVER INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANOVER INSURANCE has no effect on the direction of Salesforce i.e., Salesforce and HANOVER INSURANCE go up and down completely randomly.
Pair Corralation between Salesforce and HANOVER INSURANCE
Assuming the 90 days trading horizon Salesforce is expected to generate 1.25 times more return on investment than HANOVER INSURANCE. However, Salesforce is 1.25 times more volatile than HANOVER INSURANCE. It trades about 0.06 of its potential returns per unit of risk. HANOVER INSURANCE is currently generating about 0.03 per unit of risk. If you would invest 32,130 in Salesforce on November 6, 2024 and sell it today you would earn a total of 655.00 from holding Salesforce or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. HANOVER INSURANCE
Performance |
| Timeline |
| Salesforce |
| HANOVER INSURANCE |
Salesforce and HANOVER INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and HANOVER INSURANCE
The main advantage of trading using opposite Salesforce and HANOVER INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, HANOVER INSURANCE 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 HANOVER INSURANCE will offset losses from the drop in HANOVER INSURANCE's long position.| Salesforce vs. SAP SE | Salesforce vs. Uber Technologies | Salesforce vs. PagerDuty | Salesforce vs. Rocket Internet SE |
| HANOVER INSURANCE vs. AUST AGRICULTURAL | HANOVER INSURANCE vs. Suntory Beverage Food | HANOVER INSURANCE vs. PREMIER FOODS | HANOVER INSURANCE vs. Tyson Foods |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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