Correlation Between Microsoft Corp and Salesforce

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Microsoft Corp 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 Microsoft Corp and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft Corp and Salesforce, you can compare the effects of market volatilities on Microsoft Corp 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 Microsoft Corp with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft Corp and Salesforce.

Diversification Opportunities for Microsoft Corp and Salesforce

0.4
  Correlation Coefficient

Very weak diversification

The 1 month correlation between Microsoft and Salesforce is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft Corp and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Microsoft Corp 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 Microsoft Corp 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 Microsoft Corp i.e., Microsoft Corp and Salesforce go up and down completely randomly.

Pair Corralation between Microsoft Corp and Salesforce

Given the investment horizon of 90 days Microsoft Corp is expected to generate 0.77 times more return on investment than Salesforce. However, Microsoft Corp is 1.29 times less risky than Salesforce. It trades about -0.03 of its potential returns per unit of risk. Salesforce is currently generating about -0.06 per unit of risk. If you would invest  32,316  in Microsoft Corp on September 1, 2022 and sell it today you would lose (6,802)  from holding Microsoft Corp or give up 21.05% of portfolio value over 90 days.
Time Period1 Month [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Microsoft Corp  vs.  Salesforce

 Performance (%) 
       Timeline  
Microsoft Corp 
Microsoft Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Microsoft Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Microsoft Price Channel

Salesforce 
Salesforce Performance
0 of 100
Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in December 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Salesforce Price Channel

Microsoft Corp and Salesforce Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microsoft Corp and Salesforce

The main advantage of trading using opposite Microsoft Corp and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft Corp 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.
Microsoft Corp vs. Intuit Inc
Microsoft Corp vs. Mind CTI
Microsoft Corp vs. Autodesk
Microsoft Corp vs. Fiserv Inc
The idea behind Microsoft Corp 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.
Salesforce vs. Baozun Inc ADR
Salesforce vs. Broadridge Financial Solutions
Salesforce vs. Hewlett Packard Enterprise
Salesforce vs. Baidu Inc ADR
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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

Other Complementary Tools

Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Go
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go