Correlation Between Salesforce and BANCO

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

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

Diversification Opportunities for Salesforce and BANCO

-0.14

Correlation Coefficient

Salesforce  BANCO

Good diversification

The 3 months correlation between Salesforce and BANCO is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and BANCO SANTANDER S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANCO SANTANDER S 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 BANCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANCO SANTANDER S has no effect on the direction of Salesforce i.e., Salesforce and BANCO go up and down completely randomly.

Pair Corralation between Salesforce and BANCO

Considering the 90-day investment horizon Salesforce is expected to under-perform the BANCO. In addition to that, Salesforce is 1.77 times more volatile than BANCO SANTANDER S. It trades about -0.29 of its total potential returns per unit of risk. BANCO SANTANDER S is currently generating about 0.01 per unit of volatility. If you would invest  10,014  in BANCO SANTANDER S on October 9, 2024 and sell it today you would earn a total of  14.00  from holding BANCO SANTANDER S or generate 0.14% return on investment over 90 days.

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

Salesforce  vs.  BANCO SANTANDER S

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.

BANCO SANTANDER S

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BANCO SANTANDER S are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BANCO is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Salesforce and BANCO

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

The idea behind Salesforce and BANCO SANTANDER S 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.