Correlation Between Vacasa and Salesforce

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

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

Diversification Opportunities for Vacasa and Salesforce

0.19

Correlation Coefficient

Vacasa  Salesforce

Average diversification

The 3 months correlation between Vacasa and Salesforce is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Vacasa Inc and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Vacasa 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 Vacasa 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 Vacasa i.e., Vacasa and Salesforce go up and down completely randomly.

Pair Corralation between Vacasa and Salesforce

Given the investment horizon of 90 days Vacasa Inc is expected to under-perform the Salesforce. In addition to that, Vacasa is 2.85 times more volatile than Salesforce. It trades about -0.23 of its total potential returns per unit of risk. Salesforce is currently generating about 0.01 per unit of volatility. If you would invest  28,602  in Salesforce on February 20, 2024 and sell it today you would lose (41.00) from holding Salesforce or give up 0.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Vacasa Inc  vs.  Salesforce

Vacasa Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vacasa Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing 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 Vacasa and Salesforce

The main advantage of trading using opposite Vacasa and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vacasa 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 Vacasa 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 the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.