Correlation Between ATT and Salesforce

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Can any of the company-specific risk be diversified away by investing in both ATT 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 ATT and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and Salesforce, you can compare the effects of market volatilities on ATT 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 ATT with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Salesforce.

Diversification Opportunities for ATT and Salesforce

-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between ATT and Salesforce is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and ATT 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 ATT Inc 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 ATT i.e., ATT and Salesforce go up and down completely randomly.

Pair Corralation between ATT and Salesforce

Taking into account the 90-day investment horizon ATT is expected to generate 1.5 times less return on investment than Salesforce. But when comparing it to its historical volatility, ATT Inc is 1.85 times less risky than Salesforce. It trades about 0.24 of its potential returns per unit of risk. Salesforce is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  23,957  in Salesforce on April 23, 2024 and sell it today you would earn a total of  1,451  from holding Salesforce or generate 6.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

ATT Inc  vs.  Salesforce

 Performance 
       Timeline  
ATT Inc 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ATT unveiled solid returns over the last few months and may actually be approaching a breakup point.
Salesforce 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

ATT and Salesforce Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATT and Salesforce

The main advantage of trading using opposite ATT and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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 ATT Inc 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.
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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