Correlation Between Salesforce and BlackBerry

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

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

Diversification Opportunities for Salesforce and BlackBerry

-0.38

Correlation Coefficient

Salesforce  BlackBerry

Very good diversification

The 3 months correlation between Salesforce and BlackBerry is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and BlackBerry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackBerry 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 BlackBerry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackBerry has no effect on the direction of Salesforce i.e., Salesforce and BlackBerry go up and down completely randomly.

Pair Corralation between Salesforce and BlackBerry

Considering the 90-day investment horizon Salesforce is expected to under-perform the BlackBerry. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.88 times less risky than BlackBerry. The stock trades about -0.27 of its potential returns per unit of risk. The BlackBerry is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  262.00  in BlackBerry on January 20, 2024 and sell it today you would earn a total of  17.00  from holding BlackBerry or generate 6.49% return on investment over 90 days.

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

Salesforce  vs.  BlackBerry

Salesforce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Salesforce is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

BlackBerry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackBerry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Salesforce and BlackBerry

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

The idea behind Salesforce and BlackBerry 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.