Correlation Between Salesforce and Banana Gun

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

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

Diversification Opportunities for Salesforce and Banana Gun

0.48

Correlation Coefficient

Salesforce  Banana Gun

Very weak diversification

The 3 months correlation between Salesforce and Banana is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Banana Gun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banana Gun 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 Banana Gun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banana Gun has no effect on the direction of Salesforce i.e., Salesforce and Banana Gun go up and down completely randomly.

Pair Corralation between Salesforce and Banana Gun

Considering the 90-day investment horizon Salesforce is expected to generate 0.29 times more return on investment than Banana Gun. However, Salesforce is 3.45 times less risky than Banana Gun. It trades about -0.07 of its potential returns per unit of risk. Banana Gun is currently generating about -0.21 per unit of risk. If you would invest  33,063  in Salesforce on December 1, 2024 and sell it today you would lose (3,278) from holding Salesforce or give up 9.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Salesforce  vs.  Banana Gun

Salesforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Banana Gun

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banana Gun has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for Banana Gun investors.

Pair Trading with Salesforce and Banana Gun

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

The idea behind Salesforce and Banana Gun 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.