Correlation Between Salesforce and Costco Wholesale
Can any of the company-specific risk be diversified away by investing in both Salesforce and Costco Wholesale 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 Costco Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Costco Wholesale, you can compare the effects of market volatilities on Salesforce and Costco Wholesale 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 Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Costco Wholesale.
Diversification Opportunities for Salesforce and Costco Wholesale
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Salesforce and Costco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Costco Wholesale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale 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 Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale has no effect on the direction of Salesforce i.e., Salesforce and Costco Wholesale go up and down completely randomly.
Pair Corralation between Salesforce and Costco Wholesale
Assuming the 90 days trading horizon Salesforce is expected to generate 1.59 times more return on investment than Costco Wholesale. However, Salesforce is 1.59 times more volatile than Costco Wholesale. It trades about 0.27 of its potential returns per unit of risk. Costco Wholesale is currently generating about 0.37 per unit of risk. If you would invest 26,870 in Salesforce on September 1, 2024 and sell it today you would earn a total of 4,535 from holding Salesforce or generate 16.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Costco Wholesale
Performance |
| Timeline |
| Salesforce |
| Costco Wholesale |
Salesforce and Costco Wholesale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Costco Wholesale
The main advantage of trading using opposite Salesforce and Costco Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Costco Wholesale 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 Costco Wholesale will offset losses from the drop in Costco Wholesale's long position.| Salesforce vs. SAP SE | Salesforce vs. Superior Plus Corp | Salesforce vs. NMI Holdings | Salesforce vs. Origin Agritech |
| Costco Wholesale vs. Applied Materials | Costco Wholesale vs. RETAIL FOOD GROUP | Costco Wholesale vs. Salesforce | Costco Wholesale vs. SIDETRADE EO 1 |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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