Correlation Between Park Hotels and Salesforce

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

By analyzing existing cross correlation between Park Hotels Resorts and Salesforce, you can compare the effects of market volatilities on Park Hotels 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 Park Hotels with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Salesforce.

Diversification Opportunities for Park Hotels and Salesforce

0.4

Correlation Coefficient

Park Hotels  Salesforce

Very weak diversification

The 3 months correlation between Park and Salesforce is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Park Hotels 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 Park Hotels Resorts 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 Park Hotels i.e., Park Hotels and Salesforce go up and down completely randomly.

Pair Corralation between Park Hotels and Salesforce

Allowing for the 90-day total investment horizon Park Hotels is expected to generate 4.14 times less return on investment than Salesforce. In addition to that, Park Hotels is 1.23 times more volatile than Salesforce. It trades about 0.02 of its total potential returns per unit of risk. Salesforce is currently generating about 0.12 per unit of volatility. If you would invest  25,657  in Salesforce on July 8, 2024 and sell it today you would earn a total of  3,118  from holding Salesforce or generate 12.15% return on investment over 90 days.

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

Park Hotels Resorts  vs.  Salesforce

Park Hotels Resorts

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Park Hotels is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Salesforce

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Salesforce may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Park Hotels and Salesforce

The main advantage of trading using opposite Park Hotels and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels 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.

The idea behind Park Hotels Resorts and Salesforce 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.