Correlation Between Salesforce and Metro AG
Can any of the company-specific risk be diversified away by investing in both Salesforce and Metro AG 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 Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Metro AG, you can compare the effects of market volatilities on Salesforce and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Metro AG.
Diversification Opportunities for Salesforce and Metro AG
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Salesforce and Metro is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of Salesforce i.e., Salesforce and Metro AG go up and down completely randomly.
Pair Corralation between Salesforce and Metro AG
Assuming the 90 days trading horizon Salesforce is expected to generate 1.93 times more return on investment than Metro AG. However, Salesforce is 1.93 times more volatile than Metro AG. It trades about 0.09 of its potential returns per unit of risk. Metro AG is currently generating about 0.07 per unit of risk. If you would invest 32,505 in Salesforce on September 13, 2024 and sell it today you would earn a total of 1,540 from holding Salesforce or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Metro AG
Performance |
| Timeline |
| Salesforce |
| Metro AG |
Salesforce and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Metro AG
The main advantage of trading using opposite Salesforce and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| Salesforce vs. Superior Plus Corp | Salesforce vs. SIVERS SEMICONDUCTORS AB | Salesforce vs. Norsk Hydro ASA | Salesforce vs. Reliance Steel Aluminum |
| Metro AG vs. Lamar Advertising | Metro AG vs. YATRA ONLINE DL 0001 | Metro AG vs. MUTUIONLINE | Metro AG vs. Salesforce |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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