Correlation Between American Hotel and Salesforce
Can any of the company-specific risk be diversified away by investing in both American Hotel and Salesforce 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 American Hotel and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Hotel Income and SalesforceCom CDR, you can compare the effects of market volatilities on American Hotel and Salesforce 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 American Hotel with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Hotel and Salesforce.
Diversification Opportunities for American Hotel and Salesforce
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Salesforce is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding American Hotel Income and SalesforceCom CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalesforceCom CDR and American Hotel 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 American Hotel Income are associated (or correlated) with Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalesforceCom CDR has no effect on the direction of American Hotel i.e., American Hotel and Salesforce go up and down completely randomly.
Pair Corralation between American Hotel and Salesforce
Assuming the 90 days trading horizon American Hotel Income is expected to under-perform the Salesforce. In addition to that, American Hotel is 1.42 times more volatile than SalesforceCom CDR. It trades about -0.28 of its total potential returns per unit of risk. SalesforceCom CDR is currently generating about 0.24 per unit of volatility. If you would invest 2,185 in SalesforceCom CDR on August 30, 2024 and sell it today you would earn a total of 447.00 from holding SalesforceCom CDR or generate 20.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
American Hotel Income vs. SalesforceCom CDR
Performance |
| Timeline |
| American Hotel Income |
| SalesforceCom CDR |
American Hotel and Salesforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Hotel and Salesforce
The main advantage of trading using opposite American Hotel and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Hotel position performs unexpectedly, Salesforce 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 Salesforce will offset losses from the drop in Salesforce's long position.| American Hotel vs. Brookfield Investments | American Hotel vs. NorthWest Healthcare Properties | American Hotel vs. WELL Health Technologies | American Hotel vs. NeuPath Health |
| Salesforce vs. Stampede Drilling | Salesforce vs. Upstart Investments | Salesforce vs. Quorum Information Technologies | Salesforce vs. Bip Investment Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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