Correlation Between Salesforce and Coinbase Global

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

Diversification Opportunities for Salesforce and Coinbase Global

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Salesforce and Coinbase is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Coinbase Global Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coinbase Global 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 Coinbase Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coinbase Global has no effect on the direction of Salesforce i.e., Salesforce and Coinbase Global go up and down completely randomly.

Pair Corralation between Salesforce and Coinbase Global

Considering the 90-day investment horizon Salesforce is expected to generate 6.43 times less return on investment than Coinbase Global. But when comparing it to its historical volatility, Salesforce is 2.43 times less risky than Coinbase Global. It trades about 0.06 of its potential returns per unit of risk. Coinbase Global is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  6,278  in Coinbase Global on July 6, 2022 and sell it today you would earn a total of  1,172  from holding Coinbase Global or generate 18.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Salesforce  vs.  Coinbase Global Inc

 Performance (%) 
       Timeline  
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 latest unsteady performance, the Stock's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Salesforce Price Channel

Coinbase Global 
Coinbase Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Coinbase Global are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Coinbase Global disclosed solid returns over the last few months and may actually be approaching a breakup point.

Coinbase Price Channel

Salesforce and Coinbase Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Salesforce and Coinbase Global

The main advantage of trading using opposite Salesforce and Coinbase Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Coinbase Global 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 Coinbase Global will offset losses from the drop in Coinbase Global's long position.
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The idea behind Salesforce and Coinbase Global 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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