Correlation Between Salesforce and LUN
Can any of the company-specific risk be diversified away by investing in both Salesforce and LUN 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 LUN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and LUN, you can compare the effects of market volatilities on Salesforce and LUN 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 LUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and LUN.
Diversification Opportunities for Salesforce and LUN
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Salesforce and LUN is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and LUN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUN 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 LUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUN has no effect on the direction of Salesforce i.e., Salesforce and LUN go up and down completely randomly.
Pair Corralation between Salesforce and LUN
Considering the 90-day investment horizon Salesforce is expected to generate 7.14 times less return on investment than LUN. But when comparing it to its historical volatility, Salesforce is 9.59 times less risky than LUN. It trades about 0.1 of its potential returns per unit of risk. LUN is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.03 in LUN on August 27, 2024 and sell it today you would earn a total of 1.02 from holding LUN or generate 99.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 60.28% |
| Values | Daily Returns |
Salesforce vs. LUN
Performance |
| Timeline |
| Salesforce |
| LUN |
Salesforce and LUN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and LUN
The main advantage of trading using opposite Salesforce and LUN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, LUN 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 LUN will offset losses from the drop in LUN's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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