Correlation Between Salesforce and Agilent Technologies

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

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

Diversification Opportunities for Salesforce and Agilent Technologies

0.83
  Correlation Coefficient
Salesforce
Agilent Technologies

Very poor diversification

The 24 months correlation between Salesforce and Agilent is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Agilent Technologies in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies 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 Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Salesforce i.e., Salesforce and Agilent Technologies go up and down completely randomly.

Pair Corralation between Salesforce and Agilent Technologies

Considering the 90-day investment horizon Salesforce is expected to generate 1.39 times more return on investment than Agilent Technologies. However, Salesforce is 1.39 times more volatile than Agilent Technologies. It trades about 0.06 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.08 per unit of risk. If you would invest  15,748  in Salesforce on August 30, 2021 and sell it today you would earn a total of  12,673  from holding Salesforce or generate 80.47% return on investment over 90 days.
Time Period24 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.8%
ValuesDaily Returns

Salesforce  vs.  Agilent Technologies

 Performance (%) 
      Timeline 
Salesforce 
Salesforce Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Salesforce may actually be approaching a critical reversion point that can send shares even higher in December 2021.

Salesforce Price Channel

Agilent Technologies 
Agilent Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in December 2021.

Agilent Price Channel

Salesforce and Agilent Technologies Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Salesforce and Agilent Technologies

The main advantage of trading using opposite Salesforce and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Agilent Technologies 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 Agilent Technologies will offset losses from the drop in Agilent Technologies' long position.
The idea behind Salesforce and Agilent Technologies 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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