Correlation Between Salesforce and Corporate Office

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

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

Diversification Opportunities for Salesforce and Corporate Office

0.73

Correlation Coefficient

Salesforce  Corporate Office

Poor diversification

The 3 months correlation between Salesforce and Corporate is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of Salesforce i.e., Salesforce and Corporate Office go up and down completely randomly.

Pair Corralation between Salesforce and Corporate Office

Assuming the 90 days trading horizon Salesforce is expected to generate 1.81 times more return on investment than Corporate Office. However, Salesforce is 1.81 times more volatile than Corporate Office Properties. It trades about 0.16 of its potential returns per unit of risk. Corporate Office Properties is currently generating about 0.09 per unit of risk. If you would invest  26,119  in Salesforce on October 6, 2024 and sell it today you would earn a total of  6,121  from holding Salesforce or generate 23.44% return on investment over 90 days.

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

Salesforce  vs.  Corporate Office Properties

Salesforce

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Salesforce unveiled solid returns over the last few months and may actually be approaching a breakup point.

Corporate Office Pro

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Office Properties are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Corporate Office may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Salesforce and Corporate Office

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

The idea behind Salesforce and Corporate Office Properties 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.