Correlation Between Salesforce and USANA Health

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

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

Diversification Opportunities for Salesforce and USANA Health

0.18

Correlation Coefficient

Salesforce  USANA Health

Average diversification

The 3 months correlation between Salesforce and USANA is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and USANA Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USANA Health Sciences 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 USANA Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USANA Health Sciences has no effect on the direction of Salesforce i.e., Salesforce and USANA Health go up and down completely randomly.

Pair Corralation between Salesforce and USANA Health

Considering the 90-day investment horizon Salesforce is expected to under-perform the USANA Health. In addition to that, Salesforce is 1.3 times more volatile than USANA Health Sciences. It trades about -0.27 of its total potential returns per unit of risk. USANA Health Sciences is currently generating about -0.33 per unit of volatility. If you would invest  4,859  in USANA Health Sciences on January 20, 2024 and sell it today you would lose (512.00) from holding USANA Health Sciences or give up 10.54% of portfolio value over 90 days.

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

Salesforce  vs.  USANA Health Sciences

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.

USANA Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days USANA Health Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Salesforce and USANA Health

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

The idea behind Salesforce and USANA Health Sciences 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.