Correlation Between USANA Health and Salesforce

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

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

Diversification Opportunities for USANA Health and Salesforce

0.3

Correlation Coefficient

USANA Health  Salesforce

Weak diversification

The 3 months correlation between USANA and Salesforce is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding USANA Health Sciences and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and USANA Health 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 USANA Health Sciences 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 USANA Health i.e., USANA Health and Salesforce go up and down completely randomly.

Pair Corralation between USANA Health and Salesforce

Given the investment horizon of 90 days USANA Health Sciences is expected to under-perform the Salesforce. But the stock apears to be less risky and, when comparing its historical volatility, USANA Health Sciences is 1.25 times less risky than Salesforce. The stock trades about -0.14 of its potential returns per unit of risk. The Salesforce is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  29,242  in Salesforce on January 24, 2024 and sell it today you would lose (1,861) from holding Salesforce or give up 6.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

USANA Health Sciences  vs.  Salesforce

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 fragile 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.

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.

Pair Trading with USANA Health and Salesforce

The main advantage of trading using opposite USANA Health and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USANA Health 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 USANA Health Sciences 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.