Correlation Between Salesforce and Putnam Small
Can any of the company-specific risk be diversified away by investing in both Salesforce and Putnam Small 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 Putnam Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Putnam Small Cap, you can compare the effects of market volatilities on Salesforce and Putnam Small 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 Putnam Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Putnam Small.
Diversification Opportunities for Salesforce and Putnam Small
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Salesforce and Putnam is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Putnam Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Small Cap 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 Putnam Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Small Cap has no effect on the direction of Salesforce i.e., Salesforce and Putnam Small go up and down completely randomly.
Pair Corralation between Salesforce and Putnam Small
Considering the 90-day investment horizon Salesforce is expected to generate 1.58 times more return on investment than Putnam Small. However, Salesforce is 1.58 times more volatile than Putnam Small Cap. It trades about 0.25 of its potential returns per unit of risk. Putnam Small Cap is currently generating about 0.34 per unit of risk. If you would invest 29,472 in Salesforce on September 2, 2024 and sell it today you would earn a total of 3,527 from holding Salesforce or generate 11.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Putnam Small Cap
Performance |
| Timeline |
| Salesforce |
| Putnam Small Cap |
Salesforce and Putnam Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Putnam Small
The main advantage of trading using opposite Salesforce and Putnam Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Putnam Small 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 Putnam Small will offset losses from the drop in Putnam Small's long position.| Salesforce vs. Ke Holdings | Salesforce vs. nCino Inc | Salesforce vs. Kingsoft Cloud Holdings | Salesforce vs. Jfrog |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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