Correlation Between Salesforce and State Street

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

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

Diversification Opportunities for Salesforce and State Street

-0.19

Correlation Coefficient

Salesforce  State Street

Good diversification

The 3 months correlation between Salesforce and State is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and State Street Premier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Premier 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Premier has no effect on the direction of Salesforce i.e., Salesforce and State Street go up and down completely randomly.

Pair Corralation between Salesforce and State Street

Considering the 90-day investment horizon Salesforce is expected to generate 1.27 times less return on investment than State Street. In addition to that, Salesforce is 1.3 times more volatile than State Street Premier. It trades about 0.03 of its total potential returns per unit of risk. State Street Premier is currently generating about 0.05 per unit of volatility. If you would invest  10,523  in State Street Premier on May 1, 2025 and sell it today you would earn a total of  2,364  from holding State Street Premier or generate 22.47% return on investment over 90 days.

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

Salesforce  vs.  State Street Premier

Salesforce

Risk-Adjusted Performance

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.

State Street Premier

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Premier are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, State Street showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and State Street

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

The idea behind Salesforce and State Street Premier 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.