Correlation Between Salesforce and FIRSTCASH

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

By analyzing existing cross correlation between Salesforce and FIRSTCASH INC 4625, you can compare the effects of market volatilities on Salesforce and FIRSTCASH 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 FIRSTCASH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and FIRSTCASH.

Diversification Opportunities for Salesforce and FIRSTCASH

-0.28

Correlation Coefficient

Salesforce  FIRSTCASH

Very good diversification

The 3 months correlation between Salesforce and FIRSTCASH is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and FIRSTCASH INC 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRSTCASH INC 4625 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 FIRSTCASH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRSTCASH INC 4625 has no effect on the direction of Salesforce i.e., Salesforce and FIRSTCASH go up and down completely randomly.

Pair Corralation between Salesforce and FIRSTCASH

Considering the 90-day investment horizon Salesforce is expected to generate 11.36 times less return on investment than FIRSTCASH. But when comparing it to its historical volatility, Salesforce is 23.5 times less risky than FIRSTCASH. It trades about 0.09 of its potential returns per unit of risk. FIRSTCASH INC 4625 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,086  in FIRSTCASH INC 4625 on October 10, 2024 and sell it today you would lose (138.00) from holding FIRSTCASH INC 4625 or give up 1.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.27%
Values	Daily Returns

Salesforce  vs.  FIRSTCASH INC 4625

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.

FIRSTCASH INC 4625

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIRSTCASH INC 4625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for FIRSTCASH INC 4625 investors.

Pair Trading with Salesforce and FIRSTCASH

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

The idea behind Salesforce and FIRSTCASH INC 4625 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.