Correlation Between Fulcrum Therapeutics and Salesforce

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

By analyzing existing cross correlation between Fulcrum Therapeutics and Salesforce, you can compare the effects of market volatilities on Fulcrum Therapeutics and Salesforce 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 Fulcrum Therapeutics with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulcrum Therapeutics and Salesforce.

Diversification Opportunities for Fulcrum Therapeutics and Salesforce

0.49

Correlation Coefficient

Fulcrum Therapeutics  Salesforce

Very weak diversification

The 3 months correlation between Fulcrum and Salesforce is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Therapeutics and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Fulcrum Therapeutics 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 Fulcrum Therapeutics are associated (or correlated) with Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Fulcrum Therapeutics i.e., Fulcrum Therapeutics and Salesforce go up and down completely randomly.

Pair Corralation between Fulcrum Therapeutics and Salesforce

Given the investment horizon of 90 days Fulcrum Therapeutics is expected to generate 1.98 times more return on investment than Salesforce. However, Fulcrum Therapeutics is 1.98 times more volatile than Salesforce. It trades about 0.21 of its potential returns per unit of risk. Salesforce is currently generating about 0.09 per unit of risk. If you would invest  343.00  in Fulcrum Therapeutics on October 7, 2024 and sell it today you would earn a total of  165.00  from holding Fulcrum Therapeutics or generate 48.1% return on investment over 90 days.

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

Fulcrum Therapeutics  vs.  Salesforce

Fulcrum Therapeutics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fulcrum Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, Fulcrum Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Salesforce

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 9 (%) 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.

Pair Trading with Fulcrum Therapeutics and Salesforce

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

The idea behind Fulcrum Therapeutics and Salesforce 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.