Correlation Between Salesforce and NESTLE NIGERIA

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

Diversification Opportunities for Salesforce and NESTLE NIGERIA

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Salesforce and NESTLE is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and NESTLE NIGERIA PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESTLE NIGERIA PLC 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 NESTLE NIGERIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESTLE NIGERIA PLC has no effect on the direction of Salesforce i.e., Salesforce and NESTLE NIGERIA go up and down completely randomly.

Pair Corralation between Salesforce and NESTLE NIGERIA

If you would invest  87,500  in NESTLE NIGERIA PLC on October 23, 2024 and sell it today you would earn a total of  0.00  from holding NESTLE NIGERIA PLC or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Salesforce  vs.  NESTLE NIGERIA PLC

 Performance 
       Timeline  
Salesforce 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 8 (%) 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.
NESTLE NIGERIA PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NESTLE NIGERIA PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, NESTLE NIGERIA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Salesforce and NESTLE NIGERIA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Salesforce and NESTLE NIGERIA

The main advantage of trading using opposite Salesforce and NESTLE NIGERIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, NESTLE NIGERIA 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 NESTLE NIGERIA will offset losses from the drop in NESTLE NIGERIA's long position.
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The idea behind Salesforce and NESTLE NIGERIA PLC 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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