Correlation Between Salesforce and Automatic Bank

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

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

Diversification Opportunities for Salesforce and Automatic Bank

-0.21

Correlation Coefficient

Salesforce  Automatic Bank

Very good diversification

The 3 months correlation between Salesforce and Automatic is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Automatic Bank Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Bank Services 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 Automatic Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Bank Services has no effect on the direction of Salesforce i.e., Salesforce and Automatic Bank go up and down completely randomly.

Pair Corralation between Salesforce and Automatic Bank

Considering the 90-day investment horizon Salesforce is expected to generate 2.01 times less return on investment than Automatic Bank. But when comparing it to its historical volatility, Salesforce is 1.38 times less risky than Automatic Bank. It trades about 0.27 of its potential returns per unit of risk. Automatic Bank Services is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  141,000  in Automatic Bank Services on September 3, 2024 and sell it today you would earn a total of  72,600  from holding Automatic Bank Services or generate 51.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.88%
Values	Daily Returns

Salesforce  vs.  Automatic Bank Services

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.

Automatic Bank Services

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Bank Services are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Automatic Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Automatic Bank

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

The idea behind Salesforce and Automatic Bank Services 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.