Correlation Between Salesforce and CVS Health
Can any of the company-specific risk be diversified away by investing in both Salesforce and CVS Health 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 CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between salesforce inc and CVS Health, you can compare the effects of market volatilities on Salesforce and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and CVS Health.
Diversification Opportunities for Salesforce and CVS Health
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Salesforce and CVS is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding salesforce inc and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health 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 inc are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of Salesforce i.e., Salesforce and CVS Health go up and down completely randomly.
Pair Corralation between Salesforce and CVS Health
Assuming the 90 days trading horizon salesforce inc is expected to generate 0.61 times more return on investment than CVS Health. However, salesforce inc is 1.63 times less risky than CVS Health. It trades about 0.33 of its potential returns per unit of risk. CVS Health is currently generating about 0.03 per unit of risk. If you would invest 7,680 in salesforce inc on August 27, 2024 and sell it today you would earn a total of 1,319 from holding salesforce inc or generate 17.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
salesforce inc vs. CVS Health
Performance |
| Timeline |
| salesforce inc |
| CVS Health |
Salesforce and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and CVS Health
The main advantage of trading using opposite Salesforce and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.| Salesforce vs. Fras le SA | Salesforce vs. Clave Indices De | Salesforce vs. BTG Pactual Logstica | Salesforce vs. Telefonaktiebolaget LM Ericsson |
| CVS Health vs. Zoom Video Communications | CVS Health vs. Bread Financial Holdings | CVS Health vs. salesforce inc | CVS Health vs. Cognizant Technology Solutions |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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