Correlation Between Salesforce and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Salesforce and Fairfax Financial 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 Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SalesforceCom CDR and Fairfax Financial Holdings, you can compare the effects of market volatilities on Salesforce and Fairfax Financial 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 Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Fairfax Financial.
Diversification Opportunities for Salesforce and Fairfax Financial
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Salesforce and Fairfax is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SalesforceCom CDR and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial 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 SalesforceCom CDR are associated (or correlated) with Fairfax Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Financial has no effect on the direction of Salesforce i.e., Salesforce and Fairfax Financial go up and down completely randomly.
Pair Corralation between Salesforce and Fairfax Financial
Assuming the 90 days trading horizon SalesforceCom CDR is expected to generate 1.35 times more return on investment than Fairfax Financial. However, Salesforce is 1.35 times more volatile than Fairfax Financial Holdings. It trades about 0.13 of its potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.16 per unit of risk. If you would invest 2,047 in SalesforceCom CDR on September 21, 2024 and sell it today you would earn a total of 625.00 from holding SalesforceCom CDR or generate 30.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
SalesforceCom CDR vs. Fairfax Financial Holdings
Performance |
Timeline |
SalesforceCom CDR |
Fairfax Financial |
Salesforce and Fairfax Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Salesforce and Fairfax Financial
The main advantage of trading using opposite Salesforce and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Fairfax Financial 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 Fairfax Financial will offset losses from the drop in Fairfax Financial's long position.Salesforce vs. East Side Games | ||
Salesforce vs. Solid Impact Investments | ||
Salesforce vs. Maple Peak Investments | ||
Salesforce vs. Plaza Retail REIT |
Fairfax Financial vs. Intact Financial | ||
Fairfax Financial vs. Fairfax Financial Holdings | ||
Fairfax Financial vs. Fairfax Fin Hld | ||
Fairfax Financial vs. Intact Financial Corp |
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 the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
Transaction History View history of all your transactions and understand their impact on performance | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |