Correlation Between Raytheon Technologies and Salesforce
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies 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 Raytheon Technologies and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytheon Technologies and salesforce inc, you can compare the effects of market volatilities on Raytheon Technologies 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 Raytheon Technologies with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Salesforce.
Diversification Opportunities for Raytheon Technologies and Salesforce
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Raytheon and Salesforce is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies and salesforce inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on salesforce inc and Raytheon Technologies 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 Raytheon Technologies 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 salesforce inc has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Salesforce go up and down completely randomly.
Pair Corralation between Raytheon Technologies and Salesforce
Assuming the 90 days trading horizon Raytheon Technologies is expected to under-perform the Salesforce. But the stock apears to be less risky and, when comparing its historical volatility, Raytheon Technologies is 1.27 times less risky than Salesforce. The stock trades about -0.03 of its potential returns per unit of risk. The salesforce inc is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 7,680 in salesforce inc on August 29, 2024 and sell it today you would earn a total of 1,386 from holding salesforce inc or generate 18.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raytheon Technologies vs. salesforce inc
Performance |
| Timeline |
| Raytheon Technologies |
| salesforce inc |
Raytheon Technologies and Salesforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and Salesforce
The main advantage of trading using opposite Raytheon Technologies and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies 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.| Raytheon Technologies vs. Fras le SA | Raytheon Technologies vs. Western Digital | Raytheon Technologies vs. Clave Indices De | Raytheon Technologies vs. BTG Pactual Logstica |
| Salesforce vs. Monster Beverage | Salesforce vs. Multilaser Industrial SA | Salesforce vs. Tyson Foods | Salesforce vs. Lloyds Banking Group |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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