Correlation Between Salesforce and Fiserv

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

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

Diversification Opportunities for Salesforce and Fiserv

0.86

Correlation Coefficient

Salesforce  Fiserv

Very poor diversification

The 3 months correlation between Salesforce and Fiserv is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Fiserv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiserv 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 Fiserv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiserv Inc has no effect on the direction of Salesforce i.e., Salesforce and Fiserv go up and down completely randomly.

Pair Corralation between Salesforce and Fiserv

Assuming the 90 days trading horizon Salesforce is expected to generate 1.23 times more return on investment than Fiserv. However, Salesforce is 1.23 times more volatile than Fiserv Inc. It trades about 0.26 of its potential returns per unit of risk. Fiserv Inc is currently generating about 0.19 per unit of risk. 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

Salesforce  vs.  Fiserv Inc

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.

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 fragile basic indicators, Fiserv reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Fiserv

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

The idea behind Salesforce and Fiserv 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 the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.