Correlation Between Salesforce and Branded Legacy

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

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

Diversification Opportunities for Salesforce and Branded Legacy

0.02

Correlation Coefficient

Salesforce  Branded Legacy

Significant diversification

The 3 months correlation between Salesforce and Branded is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Branded Legacy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Branded Legacy 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 Branded Legacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Branded Legacy has no effect on the direction of Salesforce i.e., Salesforce and Branded Legacy go up and down completely randomly.

Pair Corralation between Salesforce and Branded Legacy

Considering the 90-day investment horizon Salesforce is expected to under-perform the Branded Legacy. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 11.44 times less risky than Branded Legacy. The stock trades about -0.08 of its potential returns per unit of risk. The Branded Legacy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.08  in Branded Legacy on May 4, 2025 and sell it today you would lose (0.02) from holding Branded Legacy or give up 25.0% of portfolio value over 90 days.

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

Salesforce  vs.  Branded Legacy

Salesforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Branded Legacy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Branded Legacy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Branded Legacy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Branded Legacy

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

The idea behind Salesforce and Branded Legacy 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .