Correlation Between Qantas Airways and Salesforce

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

Diversification Opportunities for Qantas Airways and Salesforce

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Qantas and Salesforce is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Qantas Airways Ltd and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Qantas Airways 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 Qantas Airways 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 Qantas Airways i.e., Qantas Airways and Salesforce go up and down completely randomly.

Pair Corralation between Qantas Airways and Salesforce

Assuming the 90 days horizon Qantas Airways is expected to generate 0.59 times more return on investment than Salesforce. However, Qantas Airways is 1.69 times less risky than Salesforce. It trades about 0.26 of its potential returns per unit of risk. Salesforce is currently generating about 0.0 per unit of risk. If you would invest  1,875  in Qantas Airways on September 4, 2022 and sell it today you would earn a total of  247.00  from holding Qantas Airways or generate 13.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Qantas Airways Ltd  vs.  Salesforce

 Performance (%) 
       Timeline  
Qantas Airways 
Qantas Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Qantas Airways are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Qantas Airways showed solid returns over the last few months and may actually be approaching a breakup point.

Qantas Price Channel

Salesforce 
Salesforce Performance
0 of 100
Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Salesforce is not utilizing all of its potentials. The newest stock price chaos, may contribute to medium-term losses for the stakeholders.

Salesforce Price Channel

Qantas Airways and Salesforce Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Qantas Airways and Salesforce

The main advantage of trading using opposite Qantas Airways and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qantas Airways 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.
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The idea behind Qantas Airways 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.
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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