Correlation Between Salesforce and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Salesforce and Franklin Lifesmart 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 Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Franklin Lifesmart 2040, you can compare the effects of market volatilities on Salesforce and Franklin Lifesmart 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 Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Franklin Lifesmart.
Diversification Opportunities for Salesforce and Franklin Lifesmart
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and Franklin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Franklin Lifesmart 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2040 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 Lifesmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Lifesmart 2040 has no effect on the direction of Salesforce i.e., Salesforce and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Salesforce and Franklin Lifesmart
Considering the 90-day investment horizon Salesforce is expected to generate 3.73 times more return on investment than Franklin Lifesmart. However, Salesforce is 3.73 times more volatile than Franklin Lifesmart 2040. It trades about 0.38 of its potential returns per unit of risk. Franklin Lifesmart 2040 is currently generating about 0.08 per unit of risk. If you would invest 29,046 in Salesforce on August 26, 2024 and sell it today you would earn a total of 5,156 from holding Salesforce or generate 17.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Franklin Lifesmart 2040
Performance |
| Timeline |
| Salesforce |
| Franklin Lifesmart 2040 |
Salesforce and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Franklin Lifesmart
The main advantage of trading using opposite Salesforce and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Franklin Lifesmart 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 Lifesmart will offset losses from the drop in Franklin Lifesmart's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Franklin Lifesmart vs. Franklin Mutual Beacon | Franklin Lifesmart vs. Templeton Developing Markets | Franklin Lifesmart vs. Franklin Mutual Global | Franklin Lifesmart vs. Franklin Mutual Global |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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