Correlation Between Salesforce and JPM Europe

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

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

Diversification Opportunities for Salesforce and JPM Europe

-0.51

Correlation Coefficient

Salesforce  JPM Europe

Excellent diversification

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

Pair Corralation between Salesforce and JPM Europe

Considering the 90-day investment horizon Salesforce is expected to under-perform the JPM Europe. In addition to that, Salesforce is 2.23 times more volatile than JPM Europe Small. It trades about -0.18 of its total potential returns per unit of risk. JPM Europe Small is currently generating about 0.13 per unit of volatility. If you would invest  8,896  in JPM Europe Small on December 22, 2024 and sell it today you would earn a total of  572.00  from holding JPM Europe Small or generate 6.43% return on investment over 90 days.

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

Salesforce  vs.  JPM Europe Small

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.

JPM Europe Small

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPM Europe Small 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, JPM Europe may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Salesforce and JPM Europe

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

The idea behind Salesforce and JPM Europe Small 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.