Correlation Between Gitlab and Salesforce

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

By analyzing existing cross correlation between Gitlab Inc and Salesforce, you can compare the effects of market volatilities on Gitlab and Salesforce 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 Gitlab with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gitlab and Salesforce.

Diversification Opportunities for Gitlab and Salesforce

0.39

Correlation Coefficient

Gitlab  Salesforce

Weak diversification

The 3 months correlation between Gitlab and Salesforce is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gitlab Inc and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Gitlab 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 Gitlab Inc are associated (or correlated) with Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Gitlab i.e., Gitlab and Salesforce go up and down completely randomly.

Pair Corralation between Gitlab and Salesforce

Given the investment horizon of 90 days Gitlab is expected to generate 1.0 times less return on investment than Salesforce. In addition to that, Gitlab is 1.85 times more volatile than Salesforce. It trades about 0.06 of its total potential returns per unit of risk. Salesforce is currently generating about 0.11 per unit of volatility. If you would invest  22,484  in Salesforce on February 17, 2024 and sell it today you would earn a total of  5,984  from holding Salesforce or generate 26.61% return on investment over 90 days.

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

Gitlab Inc  vs.  Salesforce

Gitlab Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gitlab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

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 latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gitlab and Salesforce

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

The idea behind Gitlab Inc and Salesforce 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.