Correlation Between Salesforce and MXC

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

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

Diversification Opportunities for Salesforce and MXC

0.68

Correlation Coefficient

Salesforce  MXC

Poor diversification

The 3 months correlation between Salesforce and MXC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and MXC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MXC 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 MXC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MXC has no effect on the direction of Salesforce i.e., Salesforce and MXC go up and down completely randomly.

Pair Corralation between Salesforce and MXC

Considering the 90-day investment horizon Salesforce is expected to generate 0.18 times more return on investment than MXC. However, Salesforce is 5.63 times less risky than MXC. It trades about -0.18 of its potential returns per unit of risk. MXC is currently generating about -0.09 per unit of risk. If you would invest  33,574  in Salesforce on December 29, 2024 and sell it today you would lose (6,577) from holding Salesforce or give up 19.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

Salesforce  vs.  MXC

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.

MXC

Risk-Adjusted Performance

Very Weak

Over the last 90 days MXC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for MXC shareholders.

Pair Trading with Salesforce and MXC

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

The idea behind Salesforce and MXC 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.