Correlation Between Salesforce and FIRST MUTUAL

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

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

Diversification Opportunities for Salesforce and FIRST MUTUAL

0.63

Correlation Coefficient

Salesforce  FIRST MUTUAL

Poor diversification

The 3 months correlation between Salesforce and FIRST is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and FIRST MUTUAL PROPERTIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST MUTUAL PROPERTIES 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 FIRST MUTUAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST MUTUAL PROPERTIES has no effect on the direction of Salesforce i.e., Salesforce and FIRST MUTUAL go up and down completely randomly.

Pair Corralation between Salesforce and FIRST MUTUAL

Considering the 90-day investment horizon Salesforce is expected to under-perform the FIRST MUTUAL. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 3.15 times less risky than FIRST MUTUAL. The stock trades about -0.32 of its potential returns per unit of risk. The FIRST MUTUAL PROPERTIES is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  9,500  in FIRST MUTUAL PROPERTIES on October 12, 2024 and sell it today you would earn a total of  2,795  from holding FIRST MUTUAL PROPERTIES or generate 29.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.0%
Values	Daily Returns

Salesforce  vs.  FIRST MUTUAL PROPERTIES

Salesforce

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

FIRST MUTUAL PROPERTIES

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST MUTUAL PROPERTIES are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, FIRST MUTUAL demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and FIRST MUTUAL

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

The idea behind Salesforce and FIRST MUTUAL PROPERTIES 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.