Correlation Between Salesforce and ExGen Resources

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

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

Diversification Opportunities for Salesforce and ExGen Resources

0.28

Correlation Coefficient

Salesforce  ExGen Resources

Modest diversification

The 3 months correlation between Salesforce and ExGen is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SalesforceCom CDR and ExGen Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExGen Resources 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 SalesforceCom CDR are associated (or correlated) with ExGen Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ExGen Resources has no effect on the direction of Salesforce i.e., Salesforce and ExGen Resources go up and down completely randomly.

Pair Corralation between Salesforce and ExGen Resources

Assuming the 90 days trading horizon Salesforce is expected to generate 417.24 times less return on investment than ExGen Resources. But when comparing it to its historical volatility, SalesforceCom CDR is 8.66 times less risky than ExGen Resources. It trades about 0.0 of its potential returns per unit of risk. ExGen Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9.00  in ExGen Resources on April 24, 2025 and sell it today you would lose (0.50) from holding ExGen Resources or give up 5.56% of portfolio value over 90 days.

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

SalesforceCom CDR  vs.  ExGen Resources

SalesforceCom CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days SalesforceCom CDR 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.

ExGen Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ExGen Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, ExGen Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and ExGen Resources

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

The idea behind SalesforceCom CDR and ExGen Resources 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.