Correlation Between Salesforce and Citigroup

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

By analyzing existing cross correlation between Salesforce and Citigroup, you can compare the effects of market volatilities on Salesforce and Citigroup 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 Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Citigroup.

Diversification Opportunities for Salesforce and Citigroup

0.46

Correlation Coefficient

Salesforce  Citigroup

Very weak diversification

The 3 months correlation between Salesforce and Citigroup is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup 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 Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Salesforce i.e., Salesforce and Citigroup go up and down completely randomly.

Pair Corralation between Salesforce and Citigroup

Considering the 90-day investment horizon Salesforce is expected to under-perform the Citigroup. In addition to that, Salesforce is 1.06 times more volatile than Citigroup. It trades about -0.32 of its total potential returns per unit of risk. Citigroup is currently generating about 0.27 per unit of volatility. If you would invest  7,132  in Citigroup on October 12, 2024 and sell it today you would earn a total of  133.00  from holding Citigroup or generate 1.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	30.0%
Values	Daily Returns

Salesforce  vs.  Citigroup

Salesforce

Risk-Adjusted Performance

7 of 100

OK

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. In spite of very unfluctuating basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

Citigroup

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unsteady forward indicators, Citigroup displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Citigroup

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

The idea behind Salesforce and Citigroup 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.