Correlation Between Salesforce and Nestl SA
Can any of the company-specific risk be diversified away by investing in both Salesforce and Nestl SA 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 Nestl SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Nestl SA, you can compare the effects of market volatilities on Salesforce and Nestl SA 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 Nestl SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Nestl SA.
Diversification Opportunities for Salesforce and Nestl SA
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Salesforce and Nestl is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Nestl SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestl SA 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 Nestl SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestl SA has no effect on the direction of Salesforce i.e., Salesforce and Nestl SA go up and down completely randomly.
Pair Corralation between Salesforce and Nestl SA
Considering the 90-day investment horizon Salesforce is expected to generate 1.81 times more return on investment than Nestl SA. However, Salesforce is 1.81 times more volatile than Nestl SA. It trades about 0.05 of its potential returns per unit of risk. Nestl SA is currently generating about -0.05 per unit of risk. If you would invest 26,769 in Salesforce on November 9, 2024 and sell it today you would earn a total of 6,312 from holding Salesforce or generate 23.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.52% |
| Values | Daily Returns |
Salesforce vs. Nestl SA
Performance |
| Timeline |
| Salesforce |
| Nestl SA |
Salesforce and Nestl SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Nestl SA
The main advantage of trading using opposite Salesforce and Nestl SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Nestl SA 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 Nestl SA will offset losses from the drop in Nestl SA's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
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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 the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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