Correlation Between CENTURIA OFFICE and SALESFORCE INC

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

By analyzing existing cross correlation between CENTURIA OFFICE REIT and SALESFORCE INC CDR, you can compare the effects of market volatilities on CENTURIA OFFICE and SALESFORCE INC 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 CENTURIA OFFICE with a short position of SALESFORCE INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTURIA OFFICE and SALESFORCE INC.

Diversification Opportunities for CENTURIA OFFICE and SALESFORCE INC

0.19

Correlation Coefficient

CENTURIA OFFICE  SALESFORCE INC

Average diversification

The 3 months correlation between CENTURIA and SALESFORCE is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CENTURIA OFFICE REIT and SALESFORCE INC CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SALESFORCE INC CDR and CENTURIA OFFICE 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 CENTURIA OFFICE REIT are associated (or correlated) with SALESFORCE INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SALESFORCE INC CDR has no effect on the direction of CENTURIA OFFICE i.e., CENTURIA OFFICE and SALESFORCE INC go up and down completely randomly.

Pair Corralation between CENTURIA OFFICE and SALESFORCE INC

Assuming the 90 days horizon CENTURIA OFFICE is expected to generate 4.12 times less return on investment than SALESFORCE INC. But when comparing it to its historical volatility, CENTURIA OFFICE REIT is 1.53 times less risky than SALESFORCE INC. It trades about 0.08 of its potential returns per unit of risk. SALESFORCE INC CDR is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,307  in SALESFORCE INC CDR on September 4, 2024 and sell it today you would earn a total of  463.00  from holding SALESFORCE INC CDR or generate 35.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

CENTURIA OFFICE REIT  vs.  SALESFORCE INC CDR

CENTURIA OFFICE REIT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CENTURIA OFFICE REIT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CENTURIA OFFICE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SALESFORCE INC CDR

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SALESFORCE INC CDR are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SALESFORCE INC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CENTURIA OFFICE and SALESFORCE INC

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

The idea behind CENTURIA OFFICE REIT and SALESFORCE INC CDR 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.