Correlation Between Salesforce and General Mills

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

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

Diversification Opportunities for Salesforce and General Mills

-0.72

Correlation Coefficient

Salesforce  General Mills

Pay attention - limited upside

The 3 months correlation between Salesforce and General is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills 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 General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of Salesforce i.e., Salesforce and General Mills go up and down completely randomly.

Pair Corralation between Salesforce and General Mills

Assuming the 90 days trading horizon Salesforce is expected to under-perform the General Mills. In addition to that, Salesforce is 1.09 times more volatile than General Mills. It trades about -0.15 of its total potential returns per unit of risk. General Mills is currently generating about 0.1 per unit of volatility. If you would invest  8,967  in General Mills on December 26, 2024 and sell it today you would earn a total of  944.00  from holding General Mills or generate 10.53% return on investment over 90 days.

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

Salesforce  vs.  General Mills

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

General Mills

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Mills are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, General Mills may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Salesforce and General Mills

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

The idea behind Salesforce and General Mills 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..