Correlation Between Salesforce and Excelsior Biopharma

Can any of the company-specific risk be diversified away by investing in both Salesforce and Excelsior Biopharma 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 Excelsior Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Salesforce and Excelsior Biopharma, you can compare the effects of market volatilities on Salesforce and Excelsior Biopharma 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 Excelsior Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Excelsior Biopharma.

Diversification Opportunities for Salesforce and Excelsior Biopharma

0.05

Correlation Coefficient

Salesforce  Excelsior Biopharma

Significant diversification

The 3 months correlation between Salesforce and Excelsior is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Excelsior Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excelsior Biopharma 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 Excelsior Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excelsior Biopharma has no effect on the direction of Salesforce i.e., Salesforce and Excelsior Biopharma go up and down completely randomly.

Pair Corralation between Salesforce and Excelsior Biopharma

Considering the 90-day investment horizon Salesforce is expected to under-perform the Excelsior Biopharma. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.52 times less risky than Excelsior Biopharma. The stock trades about -0.23 of its potential returns per unit of risk. The Excelsior Biopharma is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  2,995  in Excelsior Biopharma on October 11, 2024 and sell it today you would earn a total of  390.00  from holding Excelsior Biopharma or generate 13.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Salesforce  vs.  Excelsior Biopharma

Salesforce

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

Excelsior Biopharma

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Excelsior Biopharma are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Excelsior Biopharma showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Excelsior Biopharma

The main advantage of trading using opposite Salesforce and Excelsior Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Excelsior Biopharma 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 Excelsior Biopharma will offset losses from the drop in Excelsior Biopharma's long position.

The idea behind Salesforce and Excelsior Biopharma pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.