Correlation Between Salesforce and BOX

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

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

Diversification Opportunities for Salesforce and BOX

-0.11

Correlation Coefficient

Salesforce  BOX

Good diversification

The 3 months correlation between Salesforce and BOX is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and BOX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOX 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 BOX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOX has no effect on the direction of Salesforce i.e., Salesforce and BOX go up and down completely randomly.

Pair Corralation between Salesforce and BOX

Considering the 90-day investment horizon Salesforce is expected to generate 6.94 times less return on investment than BOX. But when comparing it to its historical volatility, Salesforce is 23.56 times less risky than BOX. It trades about 0.27 of its potential returns per unit of risk. BOX is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.02  in BOX on September 1, 2024 and sell it today you would lose  0.00  from holding BOX or give up 12.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Salesforce  vs.  BOX

Salesforce

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

BOX

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BOX are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, BOX exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and BOX

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

The idea behind Salesforce and BOX 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.