Correlation Between Salesforce and Nice
Can any of the company-specific risk be diversified away by investing in both Salesforce and Nice 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 Nice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Nice, you can compare the effects of market volatilities on Salesforce and Nice 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 Nice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Nice.
Diversification Opportunities for Salesforce and Nice
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and Nice is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Nice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice 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 Nice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice has no effect on the direction of Salesforce i.e., Salesforce and Nice go up and down completely randomly.
Pair Corralation between Salesforce and Nice
Considering the 90-day investment horizon Salesforce is expected to under-perform the Nice. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.16 times less risky than Nice. The stock trades about -0.27 of its potential returns per unit of risk. The Nice is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 9,068,000 in Nice on January 20, 2024 and sell it today you would lose (256,000) from holding Nice or give up 2.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Salesforce vs. Nice
Performance |
| Timeline |
| Salesforce |
| Nice |
Salesforce and Nice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Nice
The main advantage of trading using opposite Salesforce and Nice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Nice 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 Nice will offset losses from the drop in Nice's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Nice vs. Automatic Bank Services | Nice vs. EN Shoham Business | Nice vs. Rapac Communication Infrastructure | Nice vs. Tadiran Hldg |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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