Correlation Between Salesforce and Honda
Can any of the company-specific risk be diversified away by investing in both Salesforce and Honda 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 Honda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Honda Motor Co, you can compare the effects of market volatilities on Salesforce and Honda 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 Honda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Honda.
Diversification Opportunities for Salesforce and Honda
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and Honda is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Honda Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Motor 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 Honda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Motor has no effect on the direction of Salesforce i.e., Salesforce and Honda go up and down completely randomly.
Pair Corralation between Salesforce and Honda
Considering the 90-day investment horizon Salesforce is expected to generate 1.53 times more return on investment than Honda. However, Salesforce is 1.53 times more volatile than Honda Motor Co. It trades about 0.05 of its potential returns per unit of risk. Honda Motor Co is currently generating about 0.05 per unit of risk. If you would invest 16,948 in Salesforce on January 26, 2024 and sell it today you would earn a total of 10,671 from holding Salesforce or generate 62.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Salesforce vs. Honda Motor Co
Performance |
Timeline |
Salesforce |
Honda Motor |
Salesforce and Honda Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Salesforce and Honda
The main advantage of trading using opposite Salesforce and Honda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Honda 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 Honda will offset losses from the drop in Honda's long position.Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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