Correlation Between Salesforce and Xtrackers LevDAX

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

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

Diversification Opportunities for Salesforce and Xtrackers LevDAX

0.4

Correlation Coefficient

Salesforce  Xtrackers LevDAX

Very weak diversification

The 3 months correlation between Salesforce and Xtrackers is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Xtrackers LevDAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers LevDAX 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 Xtrackers LevDAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers LevDAX has no effect on the direction of Salesforce i.e., Salesforce and Xtrackers LevDAX go up and down completely randomly.

Pair Corralation between Salesforce and Xtrackers LevDAX

Considering the 90-day investment horizon Salesforce is expected to generate 1.46 times more return on investment than Xtrackers LevDAX. However, Salesforce is 1.46 times more volatile than Xtrackers LevDAX. It trades about 0.24 of its potential returns per unit of risk. Xtrackers LevDAX is currently generating about -0.03 per unit of risk. If you would invest  29,801  in Salesforce on September 3, 2024 and sell it today you would earn a total of  3,300  from holding Salesforce or generate 11.07% return on investment over 90 days.

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

Salesforce  vs.  Xtrackers LevDAX

Salesforce

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 21 (%) 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.

Xtrackers LevDAX

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers LevDAX are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Xtrackers LevDAX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Salesforce and Xtrackers LevDAX

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

The idea behind Salesforce and Xtrackers LevDAX 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.