Correlation Between Salesforce and Neuberger Berman

Can any of the company-specific risk be diversified away by investing in both Salesforce and Neuberger Berman 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 Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Salesforce and Neuberger Berman Genesis, you can compare the effects of market volatilities on Salesforce and Neuberger Berman 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 Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Neuberger Berman.

Diversification Opportunities for Salesforce and Neuberger Berman

0.34

Correlation Coefficient

Salesforce  Neuberger Berman

Weak diversification

The 3 months correlation between Salesforce and Neuberger is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Neuberger Berman Genesis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Genesis 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 Neuberger Berman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuberger Berman Genesis has no effect on the direction of Salesforce i.e., Salesforce and Neuberger Berman go up and down completely randomly.

Pair Corralation between Salesforce and Neuberger Berman

Considering the 90-day investment horizon Salesforce is expected to generate 1.84 times more return on investment than Neuberger Berman. However, Salesforce is 1.84 times more volatile than Neuberger Berman Genesis. It trades about 0.11 of its potential returns per unit of risk. Neuberger Berman Genesis is currently generating about -0.04 per unit of risk. If you would invest  29,124  in Salesforce on October 8, 2024 and sell it today you would earn a total of  4,166  from holding Salesforce or generate 14.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Salesforce  vs.  Neuberger Berman Genesis

Salesforce

Risk-Adjusted Performance

8 of 100

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.

Neuberger Berman Genesis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neuberger Berman Genesis has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Neuberger Berman is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Salesforce and Neuberger Berman

The main advantage of trading using opposite Salesforce and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Neuberger Berman 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 Neuberger Berman will offset losses from the drop in Neuberger Berman's long position.

The idea behind Salesforce and Neuberger Berman Genesis 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.