Correlation Between Salesforce and SALESFORCE INC

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

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

Diversification Opportunities for Salesforce and SALESFORCE INC

0.81

Correlation Coefficient

Salesforce  SALESFORCE INC

Very poor diversification

The 3 months correlation between Salesforce and SALESFORCE is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and SALESFORCE INC CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SALESFORCE INC CDR 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 SALESFORCE INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SALESFORCE INC CDR has no effect on the direction of Salesforce i.e., Salesforce and SALESFORCE INC go up and down completely randomly.

Pair Corralation between Salesforce and SALESFORCE INC

Assuming the 90 days trading horizon Salesforce is expected to generate 0.77 times more return on investment than SALESFORCE INC. However, Salesforce is 1.29 times less risky than SALESFORCE INC. It trades about 0.06 of its potential returns per unit of risk. SALESFORCE INC CDR is currently generating about -0.02 per unit of risk. If you would invest  20,918  in Salesforce on April 20, 2025 and sell it today you would earn a total of  1,367  from holding Salesforce or generate 6.54% return on investment over 90 days.

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

Salesforce  vs.  SALESFORCE INC CDR

Salesforce

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Salesforce may actually be approaching a critical reversion point that can send shares even higher in August 2025.

SALESFORCE INC CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days SALESFORCE INC CDR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SALESFORCE INC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Salesforce and SALESFORCE INC

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

The idea behind Salesforce and SALESFORCE INC CDR 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.