Correlation Between Salesforce and Essilor International

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

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

Diversification Opportunities for Salesforce and Essilor International

0.55

Correlation Coefficient

Salesforce  Essilor International

Very weak diversification

The 3 months correlation between Salesforce and Essilor is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Essilor International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essilor International 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 Essilor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essilor International has no effect on the direction of Salesforce i.e., Salesforce and Essilor International go up and down completely randomly.

Pair Corralation between Salesforce and Essilor International

Considering the 90-day investment horizon Salesforce is expected to generate 1.8 times more return on investment than Essilor International. However, Salesforce is 1.8 times more volatile than Essilor International SA. It trades about 0.12 of its potential returns per unit of risk. Essilor International SA is currently generating about 0.14 per unit of risk. If you would invest  24,910  in Salesforce on October 22, 2024 and sell it today you would earn a total of  7,546  from holding Salesforce or generate 30.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

Salesforce  vs.  Essilor International SA

Salesforce

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 7 (%) 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.

Essilor International

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Essilor International SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Essilor International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Salesforce and Essilor International

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

The idea behind Salesforce and Essilor International SA 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.