Correlation Between Salesforce and LumenRadio
Can any of the company-specific risk be diversified away by investing in both Salesforce and LumenRadio 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 LumenRadio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and LumenRadio AB, you can compare the effects of market volatilities on Salesforce and LumenRadio 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 LumenRadio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and LumenRadio.
Diversification Opportunities for Salesforce and LumenRadio
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Salesforce and LumenRadio is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and LumenRadio AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LumenRadio AB 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 LumenRadio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LumenRadio AB has no effect on the direction of Salesforce i.e., Salesforce and LumenRadio go up and down completely randomly.
Pair Corralation between Salesforce and LumenRadio
Considering the 90-day investment horizon Salesforce is expected to generate 1.01 times more return on investment than LumenRadio. However, Salesforce is 1.01 times more volatile than LumenRadio AB. It trades about 0.09 of its potential returns per unit of risk. LumenRadio AB is currently generating about -0.03 per unit of risk. If you would invest 25,222 in Salesforce on November 28, 2024 and sell it today you would earn a total of 5,750 from holding Salesforce or generate 22.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. LumenRadio AB
Performance |
| Timeline |
| Salesforce |
| LumenRadio AB |
Salesforce and LumenRadio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and LumenRadio
The main advantage of trading using opposite Salesforce and LumenRadio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, LumenRadio 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 LumenRadio will offset losses from the drop in LumenRadio's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| LumenRadio vs. Scandic Hotels Group | LumenRadio vs. Redsense Medical AB | LumenRadio vs. Lundin Mining | LumenRadio vs. Neola Medical AB |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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