Correlation Between Dassault Systemes and Salesforce

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

Diversification Opportunities for Dassault Systemes and Salesforce

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Dassault and Salesforce is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Systemes S and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Dassault Systemes 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 Dassault Systemes S 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 Dassault Systemes i.e., Dassault Systemes and Salesforce go up and down completely randomly.

Pair Corralation between Dassault Systemes and Salesforce

Assuming the 90 days horizon Dassault Systemes S is expected to generate 0.79 times more return on investment than Salesforce. However, Dassault Systemes S is 1.27 times less risky than Salesforce. It trades about 0.35 of its potential returns per unit of risk. Salesforce is currently generating about 0.16 per unit of risk. If you would invest  3,739  in Dassault Systemes S on May 11, 2022 and sell it today you would earn a total of  612.00  from holding Dassault Systemes S or generate 16.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Dassault Systemes S  vs.  Salesforce

 Performance (%) 
       Timeline  
Dassault Systemes 
Dassault Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Dassault Systemes S are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Dassault Systemes exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dassault Price Channel

Salesforce 
Salesforce Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Salesforce revealed solid returns over the last few months and may actually be approaching a breakup point.

Salesforce Price Channel

Dassault Systemes and Salesforce Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dassault Systemes and Salesforce

The main advantage of trading using opposite Dassault Systemes and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dassault Systemes 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.

Dassault Systemes S

Pair trading matchups for Dassault Systemes

The idea behind Dassault Systemes S 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.

Salesforce

Pair trading matchups for Salesforce

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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