Correlation Between Salesforce and Fidelity America

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

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

Diversification Opportunities for Salesforce and Fidelity America

0.79

Correlation Coefficient

Salesforce  Fidelity America

Poor diversification

The 3 months correlation between Salesforce and Fidelity is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Fidelity America AD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity America 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 Fidelity America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity America has no effect on the direction of Salesforce i.e., Salesforce and Fidelity America go up and down completely randomly.

Pair Corralation between Salesforce and Fidelity America

Considering the 90-day investment horizon Salesforce is expected to generate 2.47 times more return on investment than Fidelity America. However, Salesforce is 2.47 times more volatile than Fidelity America AD. It trades about 0.11 of its potential returns per unit of risk. Fidelity America AD is currently generating about 0.14 per unit of risk. If you would invest  29,344  in Salesforce on October 26, 2024 and sell it today you would earn a total of  4,122  from holding Salesforce or generate 14.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Salesforce  vs.  Fidelity America AD

Salesforce

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 8 (%) 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.

Fidelity America

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity America AD are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, Fidelity America may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Salesforce and Fidelity America

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

The idea behind Salesforce and Fidelity America AD 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.