Correlation Between Salesforce and Franklin High

Can any of the company-specific risk be diversified away by investing in both Salesforce and Franklin High 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 High into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Salesforce and Franklin High Income, you can compare the effects of market volatilities on Salesforce and Franklin High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Franklin High.

Diversification Opportunities for Salesforce and Franklin High

-0.24

Correlation Coefficient

Salesforce  Franklin High

Very good diversification

The 3 months correlation between Salesforce and Franklin is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Franklin High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin High Income 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 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin High Income has no effect on the direction of Salesforce i.e., Salesforce and Franklin High go up and down completely randomly.

Pair Corralation between Salesforce and Franklin High

Considering the 90-day investment horizon Salesforce is expected to under-perform the Franklin High. In addition to that, Salesforce is 6.1 times more volatile than Franklin High Income. It trades about -0.18 of its total potential returns per unit of risk. Franklin High Income is currently generating about 0.03 per unit of volatility. If you would invest  172.00  in Franklin High Income on December 31, 2024 and sell it today you would earn a total of  1.00  from holding Franklin High Income or generate 0.58% 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 High Income

Salesforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Franklin High Income

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin High Income are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Franklin High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Salesforce and Franklin High

The main advantage of trading using opposite Salesforce and Franklin High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Franklin High 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 High will offset losses from the drop in Franklin High's long position.

The idea behind Salesforce and Franklin High Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.