Correlation Between Salesforce and ATT

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

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

Diversification Opportunities for Salesforce and ATT

0.95

Correlation Coefficient

Salesforce  ATT

Almost no diversification

The 3 months correlation between Salesforce and ATT is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding salesforce inc and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 inc are associated (or correlated) with ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Salesforce i.e., Salesforce and ATT go up and down completely randomly.

Pair Corralation between Salesforce and ATT

Assuming the 90 days trading horizon salesforce inc is expected to under-perform the ATT. In addition to that, Salesforce is 1.33 times more volatile than ATT Inc. It trades about -0.23 of its total potential returns per unit of risk. ATT Inc is currently generating about -0.03 per unit of volatility. If you would invest  4,753  in ATT Inc on October 5, 2024 and sell it today you would lose (52.00) from holding ATT Inc or give up 1.09% of portfolio value over 90 days.

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

salesforce inc  vs.  ATT Inc

salesforce inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in salesforce inc are ranked lower than 15 (%) 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.

ATT Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, ATT sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and ATT

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

The idea behind salesforce inc and ATT 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.