Correlation Between Essilor International and Salesforce

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

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

Diversification Opportunities for Essilor International and Salesforce

-0.56

Correlation Coefficient

Essilor International  Salesforce

Excellent diversification

The 3 months correlation between Essilor and Salesforce is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Essilor International SA and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Essilor International 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 Essilor International SA 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 has no effect on the direction of Essilor International i.e., Essilor International and Salesforce go up and down completely randomly.

Pair Corralation between Essilor International and Salesforce

Assuming the 90 days horizon Essilor International SA is expected to generate 0.8 times more return on investment than Salesforce. However, Essilor International SA is 1.25 times less risky than Salesforce. It trades about 0.21 of its potential returns per unit of risk. Salesforce is currently generating about -0.18 per unit of risk. If you would invest  12,059  in Essilor International SA on December 23, 2024 and sell it today you would earn a total of  2,335  from holding Essilor International SA or generate 19.36% return on investment over 90 days.

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

Essilor International SA  vs.  Salesforce

Essilor International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Essilor International SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Essilor International showed solid returns over the last few months and may actually be approaching a breakup point.

Salesforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Essilor International and Salesforce

The main advantage of trading using opposite Essilor International and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essilor International 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 Essilor International SA and Salesforce 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.