Correlation Between Salesforce and Atlassian Corp

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

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

Diversification Opportunities for Salesforce and Atlassian Corp

-0.12

Correlation Coefficient

Salesforce  Atlassian Corp

Good diversification

The 3 months correlation between Salesforce and Atlassian is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Atlassian Corp Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlassian Corp Plc 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 Atlassian Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlassian Corp Plc has no effect on the direction of Salesforce i.e., Salesforce and Atlassian Corp go up and down completely randomly.

Pair Corralation between Salesforce and Atlassian Corp

Considering the 90-day investment horizon Salesforce is expected to generate 0.61 times more return on investment than Atlassian Corp. However, Salesforce is 1.64 times less risky than Atlassian Corp. It trades about 0.04 of its potential returns per unit of risk. Atlassian Corp Plc is currently generating about -0.1 per unit of risk. If you would invest  25,580  in Salesforce on February 1, 2024 and sell it today you would earn a total of  1,314  from holding Salesforce or generate 5.14% return on investment over 90 days.

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

Salesforce  vs.  Atlassian Corp Plc

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 latest stock price disarray, may contribute to short-term losses for the investors.

Atlassian Corp Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlassian Corp Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Salesforce and Atlassian Corp

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

The idea behind Salesforce and Atlassian Corp Plc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.