Correlation Between Salesforce and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Salesforce and Franklin Federal 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 Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Franklin Federal Tax Free, you can compare the effects of market volatilities on Salesforce and Franklin Federal 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 Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Franklin Federal.
Diversification Opportunities for Salesforce and Franklin Federal
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Salesforce and Franklin is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Franklin Federal Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Tax 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 Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Tax has no effect on the direction of Salesforce i.e., Salesforce and Franklin Federal go up and down completely randomly.
Pair Corralation between Salesforce and Franklin Federal
Considering the 90-day investment horizon Salesforce is expected to generate 7.5 times more return on investment than Franklin Federal. However, Salesforce is 7.5 times more volatile than Franklin Federal Tax Free. It trades about 0.11 of its potential returns per unit of risk. Franklin Federal Tax Free is currently generating about 0.07 per unit of risk. If you would invest 12,990 in Salesforce on August 28, 2024 and sell it today you would earn a total of 20,921 from holding Salesforce or generate 161.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Franklin Federal Tax Free
Performance |
| Timeline |
| Salesforce |
| Franklin Federal Tax |
Salesforce and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Franklin Federal
The main advantage of trading using opposite Salesforce and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Franklin Federal 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 Franklin Federal will offset losses from the drop in Franklin Federal's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Franklin Federal vs. Needham Aggressive Growth | Franklin Federal vs. Alliancebernstein Global High | Franklin Federal vs. Pace High Yield | Franklin Federal vs. California High Yield Municipal |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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