Correlation Between Salesforce and BT Brands

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

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

Diversification Opportunities for Salesforce and BT Brands

0.07

Correlation Coefficient

Salesforce  BT Brands

Significant diversification

The 3 months correlation between Salesforce and BTBDW is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and BT Brands Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BT Brands Warrant 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 BT Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BT Brands Warrant has no effect on the direction of Salesforce i.e., Salesforce and BT Brands go up and down completely randomly.

Pair Corralation between Salesforce and BT Brands

Considering the 90-day investment horizon Salesforce is expected to under-perform the BT Brands. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 23.56 times less risky than BT Brands. The stock trades about -0.18 of its potential returns per unit of risk. The BT Brands Warrant is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5.00  in BT Brands Warrant on December 21, 2024 and sell it today you would lose (0.88) from holding BT Brands Warrant or give up 17.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	42.37%
Values	Daily Returns

Salesforce  vs.  BT Brands Warrant

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

BT Brands Warrant

Risk-Adjusted Performance

Good

Over the last 90 days BT Brands Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unsteady fundamental indicators, BT Brands showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and BT Brands

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

The idea behind Salesforce and BT Brands Warrant 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.