Correlation Between Salesforce and SP 500
Can any of the company-specific risk be diversified away by investing in both Salesforce and SP 500 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 SP 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and SP 500 Energy, you can compare the effects of market volatilities on Salesforce and SP 500 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 SP 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and SP 500.
Diversification Opportunities for Salesforce and SP 500
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Salesforce and SPNY is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and SP 500 Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP 500 Energy 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 SP 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP 500 Energy has no effect on the direction of Salesforce i.e., Salesforce and SP 500 go up and down completely randomly.
Pair Corralation between Salesforce and SP 500
Considering the 90-day investment horizon Salesforce is expected to generate 1.55 times more return on investment than SP 500. However, Salesforce is 1.55 times more volatile than SP 500 Energy. It trades about 0.1 of its potential returns per unit of risk. SP 500 Energy is currently generating about 0.02 per unit of risk. If you would invest 13,252 in Salesforce on September 2, 2024 and sell it today you would earn a total of 19,747 from holding Salesforce or generate 149.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Salesforce vs. SP 500 Energy
Performance |
| Timeline |
Salesforce and SP 500 Volatility Contrast
Predicted Return Density |
| Returns |
Salesforce
Pair trading matchups for Salesforce
SP 500 Energy
Pair trading matchups for SP 500
Pair Trading with Salesforce and SP 500
The main advantage of trading using opposite Salesforce and SP 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, SP 500 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 SP 500 will offset losses from the drop in SP 500's long position.| Salesforce vs. Ke Holdings | Salesforce vs. nCino Inc | Salesforce vs. Kingsoft Cloud Holdings | Salesforce vs. Jfrog |
| SP 500 vs. Guangdong Investment Limited | SP 500 vs. Link Real Estate | SP 500 vs. Hudson Pacific Properties | SP 500 vs. Crombie Real Estate |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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