Correlation Between ATT and Salesforce

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.

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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.

Diversification Opportunities for ATT and Salesforce

-0.7
  Correlation Coefficient
ATT Inc
Salesforce

Excellent diversification

The 24 months correlation between ATT and Salesforce is -0.7. 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 Inc is expected to under-perform the Salesforce. But the stock apears to be less risky and, when comparing its historical volatility, ATT Inc is 1.34 times less risky than Salesforce. The stock trades about -0.11 of its potential returns per unit of risk. The Salesforce is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  26,653  in Salesforce on July 28, 2021 and sell it today you would earn a total of  2,739  from holding Salesforce or generate 10.28% return on investment over 90 days.
Time Period24 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

ATT Inc  vs.  Salesforce

 Performance (%) 
      Timeline 
ATT Inc 
 ATT Performance
0 of 100
Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ATT is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

ATT Price Channel

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 uncertain basic indicators, Salesforce may actually be approaching a critical reversion point that can send shares even higher in November 2021.

Salesforce Price Channel

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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