Correlation Between Salesforce and Leverage Shares

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Can any of the company-specific risk be diversified away by investing in both Salesforce and Leverage Shares 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 Leverage Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Leverage Shares 1x, you can compare the effects of market volatilities on Salesforce and Leverage Shares 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 Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Leverage Shares.

Diversification Opportunities for Salesforce and Leverage Shares

SalesforceLeverageDiversified AwaySalesforceLeverageDiversified Away100%
0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Salesforce and Leverage is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Leverage Shares 1x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 1x 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 Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 1x has no effect on the direction of Salesforce i.e., Salesforce and Leverage Shares go up and down completely randomly.

Pair Corralation between Salesforce and Leverage Shares

Considering the 90-day investment horizon Salesforce is expected to under-perform the Leverage Shares. In addition to that, Salesforce is 1.0 times more volatile than Leverage Shares 1x. It trades about -0.47 of its total potential returns per unit of risk. Leverage Shares 1x is currently generating about 0.05 per unit of volatility. If you would invest  220.00  in Leverage Shares 1x on November 29, 2024 and sell it today you would earn a total of  3.00  from holding Leverage Shares 1x or generate 1.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Salesforce  vs.  Leverage Shares 1x

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-50510
JavaScript chart by amCharts 3.21.15CRM SJPE
       Timeline  
Salesforce 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb300310320330340350360
Leverage Shares 1x 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Leverage Shares 1x has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Leverage Shares is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.12.152.22.252.32.352.42.452.5

Salesforce and Leverage Shares Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.49-2.62-1.74-0.86-0.01460.831.682.543.44.25 0.050.100.15
JavaScript chart by amCharts 3.21.15CRM SJPE
       Returns  

Pair Trading with Salesforce and Leverage Shares

The main advantage of trading using opposite Salesforce and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Leverage Shares 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 Leverage Shares will offset losses from the drop in Leverage Shares' long position.
The idea behind Salesforce and Leverage Shares 1x 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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