Correlation Between Salesforce and Global E

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

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

Diversification Opportunities for Salesforce and Global E

-0.22

Correlation Coefficient

Salesforce  Global E

Very good diversification

The 3 months correlation between Salesforce and Global is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online 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 Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of Salesforce i.e., Salesforce and Global E go up and down completely randomly.

Pair Corralation between Salesforce and Global E

Considering the 90-day investment horizon Salesforce is expected to under-perform the Global E. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.29 times less risky than Global E. The stock trades about -0.23 of its potential returns per unit of risk. The Global E Online is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  3,629  in Global E Online on January 26, 2024 and sell it today you would lose (276.00) from holding Global E Online or give up 7.61% of portfolio value over 90 days.

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

Salesforce  vs.  Global E Online

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.

Global E Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global E Online has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Salesforce and Global E

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

The idea behind Salesforce and Global E Online 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.