Correlation Between Enbridge and Salesforce

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

By analyzing existing cross correlation between Enbridge and SalesforceCom CDR, you can compare the effects of market volatilities on Enbridge and Salesforce 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 Enbridge with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and Salesforce.

Diversification Opportunities for Enbridge and Salesforce

-0.51

Correlation Coefficient

Enbridge  Salesforce

Excellent diversification

The 3 months correlation between Enbridge and Salesforce is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and SalesforceCom CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalesforceCom CDR and Enbridge 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 Enbridge are associated (or correlated) with Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalesforceCom CDR has no effect on the direction of Enbridge i.e., Enbridge and Salesforce go up and down completely randomly.

Pair Corralation between Enbridge and Salesforce

Assuming the 90 days trading horizon Enbridge is expected to generate 0.42 times more return on investment than Salesforce. However, Enbridge is 2.4 times less risky than Salesforce. It trades about 0.14 of its potential returns per unit of risk. SalesforceCom CDR is currently generating about -0.15 per unit of risk. If you would invest  2,056  in Enbridge on December 25, 2024 and sell it today you would earn a total of  139.00  from holding Enbridge or generate 6.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Enbridge  vs.  SalesforceCom CDR

Enbridge

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, Enbridge may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SalesforceCom CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days SalesforceCom CDR 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.

Pair Trading with Enbridge and Salesforce

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

The idea behind Enbridge and SalesforceCom CDR 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.