Correlation Between Salesforce and SPDR MSCI

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

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

Diversification Opportunities for Salesforce and SPDR MSCI

0.52

Correlation Coefficient

Salesforce  SPDR MSCI

Very weak diversification

The 3 months correlation between Salesforce and SPDR is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and SPDR MSCI ACWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI ACWI 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 SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI ACWI has no effect on the direction of Salesforce i.e., Salesforce and SPDR MSCI go up and down completely randomly.

Pair Corralation between Salesforce and SPDR MSCI

Considering the 90-day investment horizon Salesforce is expected to generate 2.55 times more return on investment than SPDR MSCI. However, Salesforce is 2.55 times more volatile than SPDR MSCI ACWI. It trades about 0.09 of its potential returns per unit of risk. SPDR MSCI ACWI is currently generating about 0.08 per unit of risk. If you would invest  15,041  in Salesforce on October 11, 2024 and sell it today you would earn a total of  17,649  from holding Salesforce or generate 117.34% return on investment over 90 days.

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

Salesforce  vs.  SPDR MSCI ACWI

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.

SPDR MSCI ACWI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR MSCI ACWI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SPDR MSCI is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Salesforce and SPDR MSCI

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

The idea behind Salesforce and SPDR MSCI ACWI 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.