Correlation Between Salesforce and Amg Frontier

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

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

Diversification Opportunities for Salesforce and Amg Frontier

0.23

Correlation Coefficient

Salesforce  Amg Frontier

Modest diversification

The 3 months correlation between Salesforce and Amg is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Amg Frontier Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Frontier Small 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 Amg Frontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Frontier Small has no effect on the direction of Salesforce i.e., Salesforce and Amg Frontier go up and down completely randomly.

Pair Corralation between Salesforce and Amg Frontier

Considering the 90-day investment horizon Salesforce is expected to generate 1.23 times more return on investment than Amg Frontier. However, Salesforce is 1.23 times more volatile than Amg Frontier Small. It trades about 0.1 of its potential returns per unit of risk. Amg Frontier Small is currently generating about -0.04 per unit of risk. If you would invest  28,984  in Salesforce on October 10, 2024 and sell it today you would earn a total of  3,509  from holding Salesforce or generate 12.11% return on investment over 90 days.

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

Salesforce  vs.  Amg Frontier Small

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.

Amg Frontier Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amg Frontier Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Amg Frontier 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 Amg Frontier

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

The idea behind Salesforce and Amg Frontier Small 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.