Correlation Between Salesforce and Large Capital

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

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

Diversification Opportunities for Salesforce and Large Capital

0.86

Correlation Coefficient

Salesforce  Large Capital

Very poor diversification

The 3 months correlation between Salesforce and Large is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Large Capital Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Capital Growth 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 Large Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Capital Growth has no effect on the direction of Salesforce i.e., Salesforce and Large Capital go up and down completely randomly.

Pair Corralation between Salesforce and Large Capital

Considering the 90-day investment horizon Salesforce is expected to generate 0.63 times more return on investment than Large Capital. However, Salesforce is 1.59 times less risky than Large Capital. It trades about -0.18 of its potential returns per unit of risk. Large Capital Growth is currently generating about -0.14 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	Strong
Accuracy	98.39%
Values	Daily Returns

Salesforce  vs.  Large Capital Growth

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.

Large Capital Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Large Capital Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Salesforce and Large Capital

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

The idea behind Salesforce and Large Capital Growth 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.