Correlation Between Salesforce and LG Display
Can any of the company-specific risk be diversified away by investing in both Salesforce and LG Display 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 LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and LG Display Co, you can compare the effects of market volatilities on Salesforce and LG Display 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 LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and LG Display.
Diversification Opportunities for Salesforce and LG Display
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Salesforce and LGA is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display 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 LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of Salesforce i.e., Salesforce and LG Display go up and down completely randomly.
Pair Corralation between Salesforce and LG Display
Assuming the 90 days trading horizon Salesforce is expected to generate 0.86 times more return on investment than LG Display. However, Salesforce is 1.17 times less risky than LG Display. It trades about 0.08 of its potential returns per unit of risk. LG Display Co is currently generating about -0.04 per unit of risk. If you would invest 15,755 in Salesforce on October 30, 2024 and sell it today you would earn a total of 17,005 from holding Salesforce or generate 107.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. LG Display Co
Performance |
| Timeline |
| Salesforce |
| LG Display |
Salesforce and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and LG Display
The main advantage of trading using opposite Salesforce and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, LG Display 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 LG Display will offset losses from the drop in LG Display's long position.| Salesforce vs. Rayonier Advanced Materials | Salesforce vs. URBAN OUTFITTERS | Salesforce vs. RELIANCE STEEL AL | Salesforce vs. Khiron Life Sciences |
| LG Display vs. HANOVER INSURANCE | LG Display vs. MAVEN WIRELESS SWEDEN | LG Display vs. Insurance Australia Group | LG Display vs. Reinsurance Group of |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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