Correlation Between Salesforce and Goldman Sachs

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

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

Diversification Opportunities for Salesforce and Goldman Sachs

0.25

Correlation Coefficient

Salesforce  Goldman Sachs

Modest diversification

The 3 months correlation between Salesforce and Goldman is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Goldman Sachs Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Income 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Income has no effect on the direction of Salesforce i.e., Salesforce and Goldman Sachs go up and down completely randomly.

Pair Corralation between Salesforce and Goldman Sachs

Considering the 90-day investment horizon Salesforce is expected to under-perform the Goldman Sachs. In addition to that, Salesforce is 4.38 times more volatile than Goldman Sachs Income. It trades about -0.09 of its total potential returns per unit of risk. Goldman Sachs Income is currently generating about 0.08 per unit of volatility. If you would invest  2,408  in Goldman Sachs Income on February 19, 2024 and sell it today you would earn a total of  32.00  from holding Goldman Sachs Income or generate 1.33% return on investment over 90 days.

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

Salesforce  vs.  Goldman Sachs Income

Salesforce

Risk-Adjusted Performance

0 of 100

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 very healthy basic indicators, Salesforce is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Goldman Sachs Income

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Income are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Salesforce and Goldman Sachs

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

The idea behind Salesforce and Goldman Sachs Income 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.