Correlation Between S A P and NICE
Can any of the company-specific risk be diversified away by investing in both S A P 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 S A P and NICE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE ADR and NICE, you can compare the effects of market volatilities on S A P 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 S A P with a short position of NICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and NICE.
Diversification Opportunities for S A P and NICE
Very weak diversification
The 3 months correlation between SAP and NICE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE ADR and NICE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NICE and S A P 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 SAP SE ADR 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 S A P i.e., S A P and NICE go up and down completely randomly.
Pair Corralation between S A P and NICE
Considering the 90-day investment horizon SAP SE ADR is expected to generate 0.77 times more return on investment than NICE. However, SAP SE ADR is 1.3 times less risky than NICE. It trades about 0.03 of its potential returns per unit of risk. NICE is currently generating about -0.07 per unit of risk. If you would invest 22,910 in SAP SE ADR on August 30, 2024 and sell it today you would earn a total of 292.00 from holding SAP SE ADR or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
SAP SE ADR vs. NICE
Performance |
| Timeline |
| SAP SE ADR |
| NICE |
S A P and NICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and NICE
The main advantage of trading using opposite S A P and NICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P 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.| S A P vs. Tyler Technologies | S A P vs. Roper Technologies, Common | S A P vs. Cadence Design Systems | S A P vs. PTC Inc |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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