Correlation Between Eastman Chemical and Salesforce

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

By analyzing existing cross correlation between Eastman Chemical and salesforce inc, you can compare the effects of market volatilities on Eastman Chemical and Salesforce 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 Eastman Chemical with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Salesforce.

Diversification Opportunities for Eastman Chemical and Salesforce

0.11

Correlation Coefficient

Eastman Chemical  Salesforce

Average diversification

The 3 months correlation between Eastman and Salesforce is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and salesforce inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on salesforce inc and Eastman Chemical 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 Eastman Chemical are associated (or correlated) with Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of salesforce inc has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and Salesforce go up and down completely randomly.

Pair Corralation between Eastman Chemical and Salesforce

Assuming the 90 days trading horizon Eastman Chemical is expected to generate 30.18 times less return on investment than Salesforce. But when comparing it to its historical volatility, Eastman Chemical is 27.88 times less risky than Salesforce. It trades about 0.16 of its potential returns per unit of risk. salesforce inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  7,898  in salesforce inc on October 7, 2024 and sell it today you would earn a total of  1,531  from holding salesforce inc or generate 19.38% return on investment over 90 days.

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

Eastman Chemical  vs.  salesforce inc

Eastman Chemical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Chemical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Eastman Chemical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

salesforce inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in salesforce inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Salesforce sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastman Chemical and Salesforce

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

The idea behind Eastman Chemical and salesforce inc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.