Correlation Between Salesforce and Airbus Group

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

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

Diversification Opportunities for Salesforce and Airbus Group

0.55

Correlation Coefficient

Salesforce  Airbus Group

Very weak diversification

The 3 months correlation between Salesforce and Airbus is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Airbus Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group SE 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 Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group SE has no effect on the direction of Salesforce i.e., Salesforce and Airbus Group go up and down completely randomly.

Pair Corralation between Salesforce and Airbus Group

Considering the 90-day investment horizon Salesforce is expected to under-perform the Airbus Group. In addition to that, Salesforce is 5.18 times more volatile than Airbus Group SE. It trades about -0.11 of its total potential returns per unit of risk. Airbus Group SE is currently generating about -0.26 per unit of volatility. If you would invest  16,158  in Airbus Group SE on March 9, 2024 and sell it today you would lose (848.00) from holding Airbus Group SE or give up 5.25% of portfolio value over 90 days.

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

Salesforce  vs.  Airbus Group SE

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 uncertain 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.

Airbus Group SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Airbus Group SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Airbus Group is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Salesforce and Airbus Group

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

The idea behind Salesforce and Airbus Group SE 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.