Correlation Between Lowes Companies and Salesforce

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

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

Diversification Opportunities for Lowes Companies and Salesforce

0.58

Correlation Coefficient

Lowes Companies  Salesforce

Very weak diversification

The 3 months correlation between Lowes and Salesforce is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lowes Companies and salesforce inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on salesforce inc and Lowes Companies 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 Lowes Companies 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 Lowes Companies i.e., Lowes Companies and Salesforce go up and down completely randomly.

Pair Corralation between Lowes Companies and Salesforce

Assuming the 90 days trading horizon Lowes Companies is expected to generate 1.41 times less return on investment than Salesforce. But when comparing it to its historical volatility, Lowes Companies is 1.23 times less risky than Salesforce. It trades about 0.13 of its potential returns per unit of risk. salesforce inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  6,538  in salesforce inc on October 4, 2024 and sell it today you would earn a total of  2,895  from holding salesforce inc or generate 44.28% return on investment over 90 days.

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

Lowes Companies  vs.  salesforce inc

Lowes Companies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lowes Companies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lowes Companies is not utilizing all of its potentials. The current 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 Lowes Companies and Salesforce

The main advantage of trading using opposite Lowes Companies and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lowes Companies 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 Lowes Companies 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.