Correlation Between Salesforce and Cisco Systems

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

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

Diversification Opportunities for Salesforce and Cisco Systems

-0.62

Correlation Coefficient

Salesforce  Cisco Systems

Excellent diversification

The 3 months correlation between Salesforce and Cisco is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems 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 Cisco Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisco Systems has no effect on the direction of Salesforce i.e., Salesforce and Cisco Systems go up and down completely randomly.

Pair Corralation between Salesforce and Cisco Systems

Considering the 90-day investment horizon Salesforce is expected to under-perform the Cisco Systems. In addition to that, Salesforce is 1.16 times more volatile than Cisco Systems. It trades about -0.15 of its total potential returns per unit of risk. Cisco Systems is currently generating about 0.02 per unit of volatility. If you would invest  5,566  in Cisco Systems on May 20, 2025 and sell it today you would earn a total of  79.00  from holding Cisco Systems or generate 1.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.38%
Values	Daily Returns

Salesforce  vs.  Cisco Systems

Salesforce

Risk-Adjusted Performance

Weakest

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cisco Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Cisco Systems is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Salesforce and Cisco Systems

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

The idea behind Salesforce and Cisco Systems 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.