Correlation Between Salesforce and Vail Resorts

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

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

Diversification Opportunities for Salesforce and Vail Resorts

0.65

Correlation Coefficient

Salesforce  Vail Resorts

Poor diversification

The 3 months correlation between Salesforce and Vail is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Vail Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vail Resorts 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 Vail Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vail Resorts has no effect on the direction of Salesforce i.e., Salesforce and Vail Resorts go up and down completely randomly.

Pair Corralation between Salesforce and Vail Resorts

Considering the 90-day investment horizon Salesforce is expected to generate 1.13 times more return on investment than Vail Resorts. However, Salesforce is 1.13 times more volatile than Vail Resorts. It trades about -0.14 of its potential returns per unit of risk. Vail Resorts is currently generating about -0.23 per unit of risk. If you would invest  30,337  in Salesforce on February 5, 2024 and sell it today you would lose (2,971) from holding Salesforce or give up 9.79% of portfolio value over 90 days.

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

Salesforce  vs.  Vail Resorts

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.

Vail Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vail Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Salesforce and Vail Resorts

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

The idea behind Salesforce and Vail Resorts 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.