Correlation Between Salesforce and Albertsons Companies

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

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

Diversification Opportunities for Salesforce and Albertsons Companies

0.54

Correlation Coefficient

Salesforce  Albertsons Companies

Very weak diversification

The 3 months correlation between Salesforce and Albertsons is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies 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 Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Salesforce i.e., Salesforce and Albertsons Companies go up and down completely randomly.

Pair Corralation between Salesforce and Albertsons Companies

Considering the 90-day investment horizon Salesforce is expected to under-perform the Albertsons Companies. In addition to that, Salesforce is 5.52 times more volatile than Albertsons Companies. It trades about -0.12 of its total potential returns per unit of risk. Albertsons Companies is currently generating about -0.08 per unit of volatility. If you would invest  2,055  in Albertsons Companies on March 12, 2024 and sell it today you would lose (48.00) from holding Albertsons Companies or give up 2.34% of portfolio value over 90 days.

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

Salesforce  vs.  Albertsons Companies

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Albertsons Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Albertsons Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Albertsons Companies is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Salesforce and Albertsons Companies

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

The idea behind Salesforce and Albertsons Companies 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.