Correlation Between Salesforce and Small Cap

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

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

Diversification Opportunities for Salesforce and Small Cap

0.28

Correlation Coefficient

Salesforce  Small Cap

Modest diversification

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

Pair Corralation between Salesforce and Small Cap

Considering the 90-day investment horizon Salesforce is expected to generate 5.33 times less return on investment than Small Cap. In addition to that, Salesforce is 1.21 times more volatile than Small Cap Value. It trades about 0.02 of its total potential returns per unit of risk. Small Cap Value is currently generating about 0.12 per unit of volatility. If you would invest  921.00  in Small Cap Value on April 24, 2025 and sell it today you would earn a total of  88.00  from holding Small Cap Value or generate 9.55% return on investment over 90 days.

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

Salesforce  vs.  Small Cap Value

Salesforce

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Small Cap Value

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Value are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Small Cap may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Salesforce and Small Cap

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

The idea behind Salesforce and Small Cap Value 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 Stocks Directory module to find actively traded stocks across global markets.