Correlation Between Salesforce and XCHG Limited

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

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

Diversification Opportunities for Salesforce and XCHG Limited

0.42

Correlation Coefficient

Salesforce  XCHG Limited

Very weak diversification

The 3 months correlation between Salesforce and XCHG is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and XCHG Limited American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XCHG Limited American 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 XCHG Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XCHG Limited American has no effect on the direction of Salesforce i.e., Salesforce and XCHG Limited go up and down completely randomly.

Pair Corralation between Salesforce and XCHG Limited

Considering the 90-day investment horizon Salesforce is expected to generate 0.28 times more return on investment than XCHG Limited. However, Salesforce is 3.53 times less risky than XCHG Limited. It trades about -0.18 of its potential returns per unit of risk. XCHG Limited American is currently generating about -0.1 per unit of risk. If you would invest  34,365  in Salesforce on December 20, 2024 and sell it today you would lose (6,426) from holding Salesforce or give up 18.7% of portfolio value over 90 days.

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

Salesforce  vs.  XCHG Limited American

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.

XCHG Limited American

Risk-Adjusted Performance

Very Weak

Over the last 90 days XCHG Limited American has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Salesforce and XCHG Limited

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

The idea behind Salesforce and XCHG Limited American 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.