Correlation Between Salesforce and Consolidated Edison

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

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

Diversification Opportunities for Salesforce and Consolidated Edison

0.14

Correlation Coefficient

Salesforce  Consolidated Edison

Average diversification

The 3 months correlation between Salesforce and Consolidated is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Consolidated Edison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Edison 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 Consolidated Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Edison has no effect on the direction of Salesforce i.e., Salesforce and Consolidated Edison go up and down completely randomly.

Pair Corralation between Salesforce and Consolidated Edison

Considering the 90-day investment horizon Salesforce is expected to under-perform the Consolidated Edison. In addition to that, Salesforce is 1.27 times more volatile than Consolidated Edison. It trades about -0.08 of its total potential returns per unit of risk. Consolidated Edison is currently generating about -0.04 per unit of volatility. If you would invest  10,859  in Consolidated Edison on May 4, 2025 and sell it today you would lose (415.00) from holding Consolidated Edison or give up 3.82% of portfolio value over 90 days.

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

Salesforce  vs.  Consolidated Edison

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 inconsistent 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.

Consolidated Edison

Risk-Adjusted Performance

Very Weak

Over the last 90 days Consolidated Edison has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Consolidated Edison is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Salesforce and Consolidated Edison

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

The idea behind Salesforce and Consolidated Edison 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.