Correlation Between Salesforce and Nexteer Automotive
Can any of the company-specific risk be diversified away by investing in both Salesforce and Nexteer Automotive 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 Nexteer Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Nexteer Automotive Group, you can compare the effects of market volatilities on Salesforce and Nexteer Automotive 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 Nexteer Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Nexteer Automotive.
Diversification Opportunities for Salesforce and Nexteer Automotive
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Salesforce and Nexteer is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Nexteer Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexteer Automotive 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 Nexteer Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexteer Automotive has no effect on the direction of Salesforce i.e., Salesforce and Nexteer Automotive go up and down completely randomly.
Pair Corralation between Salesforce and Nexteer Automotive
Considering the 90-day investment horizon Salesforce is expected to under-perform the Nexteer Automotive. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 2.59 times less risky than Nexteer Automotive. The stock trades about -0.47 of its potential returns per unit of risk. The Nexteer Automotive Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Nexteer Automotive Group on November 29, 2024 and sell it today you would earn a total of 7.00 from holding Nexteer Automotive Group or generate 17.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Salesforce vs. Nexteer Automotive Group
Performance |
| Timeline |
| Salesforce |
| Nexteer Automotive |
Salesforce and Nexteer Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Nexteer Automotive
The main advantage of trading using opposite Salesforce and Nexteer Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Nexteer Automotive 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 Nexteer Automotive will offset losses from the drop in Nexteer Automotive's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Nexteer Automotive vs. Adient PLC | Nexteer Automotive vs. Holley Inc | Nexteer Automotive vs. ECARX Holdings Class | Nexteer Automotive vs. Autoliv |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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