Correlation Between Salesforce and Wipro

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

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

Diversification Opportunities for Salesforce and Wipro

0.78

Correlation Coefficient

Salesforce  Wipro

Poor diversification

The 3 months correlation between Salesforce and Wipro is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Wipro Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wipro Limited 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 Wipro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wipro Limited has no effect on the direction of Salesforce i.e., Salesforce and Wipro go up and down completely randomly.

Pair Corralation between Salesforce and Wipro

Considering the 90-day investment horizon Salesforce is expected to under-perform the Wipro. In addition to that, Salesforce is 1.98 times more volatile than Wipro Limited. It trades about -0.11 of its total potential returns per unit of risk. Wipro Limited is currently generating about -0.19 per unit of volatility. If you would invest  570.00  in Wipro Limited on March 5, 2024 and sell it today you would lose (100.00) from holding Wipro Limited or give up 17.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Salesforce  vs.  Wipro Limited

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Wipro Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wipro Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Salesforce and Wipro

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

The idea behind Salesforce and Wipro Limited 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.