Correlation Between Salesforce and Nike

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

Diversification Opportunities for Salesforce and Nike

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Salesforce and Nike is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Salesforce i.e., Salesforce and Nike go up and down completely randomly.

Pair Corralation between Salesforce and Nike

Considering the 90-day investment horizon Salesforce is expected to generate 3.49 times less return on investment than Nike. In addition to that, Salesforce is 1.35 times more volatile than Nike Inc. It trades about 0.0 of its total potential returns per unit of risk. Nike Inc is currently generating about 0.02 per unit of volatility. If you would invest  9,723  in Nike Inc on March 30, 2022 and sell it today you would earn a total of  1,327  from holding Nike Inc or generate 13.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.8%
ValuesDaily Returns

Salesforce  vs.  Nike Inc

 Performance (%) 
      Timeline 
Salesforce 
Salesforce Performance
0 of 100
Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in July 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Structure and Payout Changes

Last Split Factor
4:1
Last Split Date
2013-04-18

Salesforce Price Channel

Nike Inc 
Nike Performance
0 of 100
Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in July 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nike Price Channel

Salesforce and Nike Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Salesforce and Nike

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

Salesforce

Pair trading matchups for Salesforce

The idea behind Salesforce and Nike Inc 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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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