Correlation Between Salesforce and Costamare

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

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

Diversification Opportunities for Salesforce and Costamare

-0.39

Correlation Coefficient

Salesforce  Costamare

Very good diversification

The 3 months correlation between Salesforce and Costamare is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Costamare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costamare 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 Costamare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costamare has no effect on the direction of Salesforce i.e., Salesforce and Costamare go up and down completely randomly.

Pair Corralation between Salesforce and Costamare

Considering the 90-day investment horizon Salesforce is expected to under-perform the Costamare. In addition to that, Salesforce is 3.11 times more volatile than Costamare. It trades about -0.04 of its total potential returns per unit of risk. Costamare is currently generating about 0.14 per unit of volatility. If you would invest  2,486  in Costamare on November 29, 2024 and sell it today you would earn a total of  144.00  from holding Costamare or generate 5.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Salesforce  vs.  Costamare

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 very healthy basic indicators, Salesforce is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Costamare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Costamare are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Costamare is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Salesforce and Costamare

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

The idea behind Salesforce and Costamare 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.