Correlation Between Salesforce and DexCom

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

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

Diversification Opportunities for Salesforce and DexCom

0.75

Correlation Coefficient

Salesforce  DexCom

Poor diversification

The 3 months correlation between Salesforce and DexCom is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding salesforce inc and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc 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 inc are associated (or correlated) with DexCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DexCom Inc has no effect on the direction of Salesforce i.e., Salesforce and DexCom go up and down completely randomly.

Pair Corralation between Salesforce and DexCom

Assuming the 90 days trading horizon salesforce inc is expected to generate 0.69 times more return on investment than DexCom. However, salesforce inc is 1.46 times less risky than DexCom. It trades about 0.3 of its potential returns per unit of risk. DexCom Inc is currently generating about 0.1 per unit of risk. If you would invest  6,334  in salesforce inc on September 3, 2024 and sell it today you would earn a total of  2,693  from holding salesforce inc or generate 42.52% return on investment over 90 days.

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

salesforce inc  vs.  DexCom Inc

salesforce inc

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in salesforce inc are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Salesforce sustained solid returns over the last few months and may actually be approaching a breakup point.

DexCom Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, DexCom sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and DexCom

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

The idea behind salesforce inc and DexCom Inc 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.