Correlation Between Salesforce and Free Market

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

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

Diversification Opportunities for Salesforce and Free Market

-0.67

Correlation Coefficient

Salesforce  Free Market

Excellent diversification

The 3 months correlation between Salesforce and Free is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Free Market Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Free Market Fixed 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 Free Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Free Market Fixed has no effect on the direction of Salesforce i.e., Salesforce and Free Market go up and down completely randomly.

Pair Corralation between Salesforce and Free Market

Considering the 90-day investment horizon Salesforce is expected to under-perform the Free Market. In addition to that, Salesforce is 14.61 times more volatile than Free Market Fixed. It trades about -0.18 of its total potential returns per unit of risk. Free Market Fixed is currently generating about 0.16 per unit of volatility. If you would invest  987.00  in Free Market Fixed on December 20, 2024 and sell it today you would earn a total of  12.00  from holding Free Market Fixed or generate 1.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Salesforce  vs.  Free Market Fixed

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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Free Market Fixed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Free Market Fixed are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Free Market 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 Free Market

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

The idea behind Salesforce and Free Market Fixed 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.