Correlation Between Salesforce and Five Star

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Can any of the company-specific risk be diversified away by investing in both Salesforce and Five Star 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 Five Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Five Star Bancorp, you can compare the effects of market volatilities on Salesforce and Five Star 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 Five Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Five Star.

Diversification Opportunities for Salesforce and Five Star

-0.75
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Salesforce and Five is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Five Star Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Star Bancorp 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 Five Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Star Bancorp has no effect on the direction of Salesforce i.e., Salesforce and Five Star go up and down completely randomly.

Pair Corralation between Salesforce and Five Star

Considering the 90-day investment horizon Salesforce is expected to generate 1.05 times more return on investment than Five Star. However, Salesforce is 1.05 times more volatile than Five Star Bancorp. It trades about 0.05 of its potential returns per unit of risk. Five Star Bancorp is currently generating about 0.0 per unit of risk. If you would invest  19,691  in Salesforce on December 29, 2023 and sell it today you would earn a total of  10,447  from holding Salesforce or generate 53.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Salesforce  vs.  Five Star Bancorp

 Performance 
       Timeline  
Salesforce 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.
Five Star Bancorp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Five Star Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Salesforce and Five Star Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Salesforce and Five Star

The main advantage of trading using opposite Salesforce and Five Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Five Star 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 Five Star will offset losses from the drop in Five Star's long position.
The idea behind Salesforce and Five Star Bancorp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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