Correlation Between Salesforce and Qantas Airways

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

Diversification Opportunities for Salesforce and Qantas Airways

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Salesforce and Qantas is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Qantas Airways Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways 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 Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways has no effect on the direction of Salesforce i.e., Salesforce and Qantas Airways go up and down completely randomly.

Pair Corralation between Salesforce and Qantas Airways

Considering the 90-day investment horizon Salesforce is expected to under-perform the Qantas Airways. In addition to that, Salesforce is 2.12 times more volatile than Qantas Airways. It trades about -0.08 of its total potential returns per unit of risk. Qantas Airways is currently generating about 0.14 per unit of volatility. If you would invest  1,963  in Qantas Airways on September 8, 2022 and sell it today you would earn a total of  106.00  from holding Qantas Airways or generate 5.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Salesforce  vs.  Qantas Airways Ltd

 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 unsteady performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in January 2023. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Salesforce Price Channel

Qantas Airways 
Qantas Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Qantas Airways are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish basic indicators, Qantas Airways showed solid returns over the last few months and may actually be approaching a breakup point.

Qantas Price Channel

Salesforce and Qantas Airways Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Salesforce and Qantas Airways

The main advantage of trading using opposite Salesforce and Qantas Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Qantas Airways 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 Qantas Airways will offset losses from the drop in Qantas Airways' long position.
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The idea behind Salesforce and Qantas Airways 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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