Correlation Between Salesforce and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both Salesforce and MELIA 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 MELIA HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and MELIA HOTELS, you can compare the effects of market volatilities on Salesforce and MELIA 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 MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and MELIA HOTELS.
Diversification Opportunities for Salesforce and MELIA HOTELS
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Salesforce and MELIA is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA 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 MELIA HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MELIA HOTELS has no effect on the direction of Salesforce i.e., Salesforce and MELIA HOTELS go up and down completely randomly.
Pair Corralation between Salesforce and MELIA HOTELS
Assuming the 90 days trading horizon Salesforce is expected to generate 1.28 times more return on investment than MELIA HOTELS. However, Salesforce is 1.28 times more volatile than MELIA HOTELS. It trades about 0.26 of its potential returns per unit of risk. MELIA HOTELS is currently generating about 0.07 per unit of risk. If you would invest 22,716 in Salesforce on September 3, 2024 and sell it today you would earn a total of 8,689 from holding Salesforce or generate 38.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. MELIA HOTELS
Performance |
| Timeline |
| Salesforce |
| MELIA HOTELS |
Salesforce and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and MELIA HOTELS
The main advantage of trading using opposite Salesforce and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, MELIA 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 MELIA HOTELS will offset losses from the drop in MELIA HOTELS's long position.| Salesforce vs. Rocket Internet SE | Salesforce vs. Superior Plus Corp | Salesforce vs. NMI Holdings | Salesforce vs. Origin Agritech |
| MELIA HOTELS vs. TOTAL GABON | MELIA HOTELS vs. Walgreens Boots Alliance | MELIA HOTELS vs. Peak Resources Limited |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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