Correlation Between Salesforce and Goldman Sachs

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

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

Diversification Opportunities for Salesforce and Goldman Sachs

0.63

Correlation Coefficient

Salesforce  Goldman Sachs

Poor diversification

The 3 months correlation between Salesforce and Goldman is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Goldman Sachs Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Capital 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Capital has no effect on the direction of Salesforce i.e., Salesforce and Goldman Sachs go up and down completely randomly.

Pair Corralation between Salesforce and Goldman Sachs

Considering the 90-day investment horizon Salesforce is expected to under-perform the Goldman Sachs. In addition to that, Salesforce is 1.75 times more volatile than Goldman Sachs Capital. It trades about -0.18 of its total potential returns per unit of risk. Goldman Sachs Capital is currently generating about -0.08 per unit of volatility. If you would invest  4,021  in Goldman Sachs Capital on December 23, 2024 and sell it today you would lose (217.00) from holding Goldman Sachs Capital or give up 5.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Salesforce  vs.  Goldman Sachs Capital

Salesforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Goldman Sachs Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Capital has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Salesforce and Goldman Sachs

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

The idea behind Salesforce and Goldman Sachs Capital 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.