Correlation Between Salesforce and Oracle

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

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

Diversification Opportunities for Salesforce and Oracle

0.86

Correlation Coefficient

Salesforce  Oracle

Very poor diversification

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

Pair Corralation between Salesforce and Oracle

Assuming the 90 days trading horizon Salesforce is expected to generate 1.01 times less return on investment than Oracle. But when comparing it to its historical volatility, salesforce inc is 1.07 times less risky than Oracle. It trades about 0.1 of its potential returns per unit of risk. Oracle is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7,468  in Oracle on September 29, 2024 and sell it today you would earn a total of  10,132  from holding Oracle or generate 135.67% return on investment over 90 days.

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

salesforce inc  vs.  Oracle

salesforce inc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in salesforce inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Salesforce sustained solid returns over the last few months and may actually be approaching a breakup point.

Oracle

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Oracle sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Oracle

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

The idea behind salesforce inc and Oracle 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.