Correlation Between Fiserv and Salesforce

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

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

Diversification Opportunities for Fiserv and Salesforce

0.88

Correlation Coefficient

Fiserv  Salesforce

Very poor diversification

The 3 months correlation between Fiserv and Salesforce is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fiserv Inc and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Fiserv 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 Fiserv Inc are associated (or correlated) with Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Fiserv i.e., Fiserv and Salesforce go up and down completely randomly.

Pair Corralation between Fiserv and Salesforce

Assuming the 90 days horizon Fiserv is expected to generate 1.66 times less return on investment than Salesforce. But when comparing it to its historical volatility, Fiserv Inc is 1.23 times less risky than Salesforce. It trades about 0.19 of its potential returns per unit of risk. Salesforce is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  23,507  in Salesforce on September 20, 2024 and sell it today you would earn a total of  10,018  from holding Salesforce or generate 42.62% return on investment over 90 days.

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

Fiserv Inc  vs.  Salesforce

Fiserv Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fiserv Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Fiserv reported solid returns over the last few months and may actually be approaching a breakup point.

Salesforce

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Salesforce unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fiserv and Salesforce

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

The idea behind Fiserv Inc and Salesforce 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.