Correlation Between NTT Data and Salesforce

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Can any of the company-specific risk be diversified away by investing in both NTT Data 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 NTT Data and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NTT Data Corp and Salesforce, you can compare the effects of market volatilities on NTT Data 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 NTT Data with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTT Data and Salesforce.

Diversification Opportunities for NTT Data and Salesforce

  Correlation Coefficient

Significant diversification

The 3 months correlation between NTDTY and Salesforce is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding NTT Data Corp and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and NTT Data 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 NTT Data Corp 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 NTT Data i.e., NTT Data and Salesforce go up and down completely randomly.

Pair Corralation between NTT Data and Salesforce

Assuming the 90 days horizon NTT Data Corp is expected to generate 0.64 times more return on investment than Salesforce. However, NTT Data Corp is 1.57 times less risky than Salesforce. It trades about 0.22 of its potential returns per unit of risk. Salesforce is currently generating about -0.08 per unit of risk. If you would invest  1,355  in NTT Data Corp on September 8, 2022 and sell it today you would earn a total of  163.00  from holding NTT Data Corp or generate 12.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

NTT Data Corp  vs.  Salesforce

 Performance (%) 
NTT Data Corp 
NTDTY Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in NTT Data Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish basic indicators, NTT Data showed solid returns over the last few months and may actually be approaching a breakup point.

NTDTY Price Channel

Salesforce Performance
0 of 100
Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in January 2023. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Salesforce Price Channel

NTT Data and Salesforce Volatility Contrast

   Predicted Return Density   

Pair Trading with NTT Data and Salesforce

The main advantage of trading using opposite NTT Data and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTT Data 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.
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The idea behind NTT Data Corp 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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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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