Correlation Between Salesforce and NXS

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

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

Diversification Opportunities for Salesforce and NXS

0.77

Correlation Coefficient

Salesforce  NXS

Poor diversification

The 3 months correlation between Salesforce and NXS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and NXS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXS 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 NXS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXS has no effect on the direction of Salesforce i.e., Salesforce and NXS go up and down completely randomly.

Pair Corralation between Salesforce and NXS

Considering the 90-day investment horizon Salesforce is expected to under-perform the NXS. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.73 times less risky than NXS. The stock trades about -0.18 of its potential returns per unit of risk. The NXS is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  23.00  in NXS on December 29, 2024 and sell it today you would lose (3.00) from holding NXS or give up 13.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.85%
Values	Daily Returns

Salesforce  vs.  NXS

Salesforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

NXS

Risk-Adjusted Performance

Very Weak

Over the last 90 days NXS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for NXS shareholders.

Pair Trading with Salesforce and NXS

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

The idea behind Salesforce and NXS 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.