Correlation Between Salesforce and Image Protect

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

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

Diversification Opportunities for Salesforce and Image Protect

-0.22

Correlation Coefficient

Salesforce  Image Protect

Very good diversification

The 3 months correlation between Salesforce and Image is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Image Protect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Image Protect 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 Image Protect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Image Protect has no effect on the direction of Salesforce i.e., Salesforce and Image Protect go up and down completely randomly.

Pair Corralation between Salesforce and Image Protect

Considering the 90-day investment horizon Salesforce is expected to under-perform the Image Protect. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 120.63 times less risky than Image Protect. The stock trades about -0.05 of its potential returns per unit of risk. The Image Protect is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Image Protect on May 3, 2025 and sell it today you would lose (0.01) from holding Image Protect or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Salesforce  vs.  Image Protect

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 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.

Image Protect

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Image Protect are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Image Protect disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Image Protect

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

The idea behind Salesforce and Image Protect 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 Transaction History module to view history of all your transactions and understand their impact on performance.