Correlation Between Salesforce and Legal General

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

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

Diversification Opportunities for Salesforce and Legal General

0.51

Correlation Coefficient

Salesforce  Legal General

Very weak diversification

The 3 months correlation between Salesforce and Legal is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Legal General UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General UCITS 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 Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General UCITS has no effect on the direction of Salesforce i.e., Salesforce and Legal General go up and down completely randomly.

Pair Corralation between Salesforce and Legal General

Considering the 90-day investment horizon Salesforce is expected to under-perform the Legal General. In addition to that, Salesforce is 1.47 times more volatile than Legal General UCITS. It trades about -0.18 of its total potential returns per unit of risk. Legal General UCITS is currently generating about -0.08 per unit of volatility. If you would invest  2,175  in Legal General UCITS on December 22, 2024 and sell it today you would lose (134.00) from holding Legal General UCITS or give up 6.16% of portfolio value over 90 days.

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

Salesforce  vs.  Legal General UCITS

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.

Legal General UCITS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Legal General UCITS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Legal General is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Salesforce and Legal General

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

The idea behind Salesforce and Legal General UCITS 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.