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 SA, 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

0.01

Correlation Coefficient

Salesforce  BANCO

Significant diversification

The 3 months correlation between Salesforce and BANCO is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and BANCO SANTANDER SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANCO SANTANDER SA 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 SA 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 generate 10.26 times more return on investment than BANCO. However, Salesforce is 10.26 times more volatile than BANCO SANTANDER SA. It trades about 0.04 of its potential returns per unit of risk. BANCO SANTANDER SA is currently generating about -0.01 per unit of risk. If you would invest  29,307  in Salesforce on October 9, 2024 and sell it today you would earn a total of  3,186  from holding Salesforce or generate 10.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.01%
Values	Daily Returns

Salesforce  vs.  BANCO SANTANDER 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.

BANCO SANTANDER SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANCO SANTANDER SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BANCO 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 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 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.