Correlation Between Salesforce and SIG Combibloc

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

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

Diversification Opportunities for Salesforce and SIG Combibloc

0.22

Correlation Coefficient

Salesforce  SIG Combibloc

Modest diversification

The 3 months correlation between Salesforce and SIG is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and SIG Combibloc Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIG Combibloc Group 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 SIG Combibloc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIG Combibloc Group has no effect on the direction of Salesforce i.e., Salesforce and SIG Combibloc go up and down completely randomly.

Pair Corralation between Salesforce and SIG Combibloc

Considering the 90-day investment horizon Salesforce is expected to generate 0.99 times more return on investment than SIG Combibloc. However, Salesforce is 1.01 times less risky than SIG Combibloc. It trades about 0.27 of its potential returns per unit of risk. SIG Combibloc Group is currently generating about 0.01 per unit of risk. If you would invest  24,767  in Salesforce on September 3, 2024 and sell it today you would earn a total of  8,232  from holding Salesforce or generate 33.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Salesforce  vs.  SIG Combibloc Group

Salesforce

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 21 (%) 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.

SIG Combibloc Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIG Combibloc Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SIG Combibloc is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Salesforce and SIG Combibloc

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

The idea behind Salesforce and SIG Combibloc Group 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.