Correlation Between Continental and Salesforce
Can any of the company-specific risk be diversified away by investing in both Continental 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 Continental and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caleres and Salesforce, you can compare the effects of market volatilities on Continental 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 Continental with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental and Salesforce.
Diversification Opportunities for Continental and Salesforce
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Continental and Salesforce is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Caleres and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Continental 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 Caleres 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 Continental i.e., Continental and Salesforce go up and down completely randomly.
Pair Corralation between Continental and Salesforce
Considering the 90-day investment horizon Caleres is expected to under-perform the Salesforce. But the stock apears to be less risky and, when comparing its historical volatility, Caleres is 1.05 times less risky than Salesforce. The stock trades about -0.29 of its potential returns per unit of risk. The Salesforce is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest 30,145 in Salesforce on January 19, 2024 and sell it today you would lose (2,953) from holding Salesforce or give up 9.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caleres vs. Salesforce
Performance |
| Timeline |
| Continental |
| Salesforce |
Continental and Salesforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental and Salesforce
The main advantage of trading using opposite Continental and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental 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.| Continental vs. Vera Bradley | Continental vs. Wolverine World Wide | Continental vs. Rocky Brands | Continental vs. Steven Madden |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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