Correlation Between Jfrog and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Jfrog and ServiceNow 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 Jfrog and ServiceNow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jfrog and ServiceNow, you can compare the effects of market volatilities on Jfrog and ServiceNow 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 Jfrog with a short position of ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jfrog and ServiceNow.
Diversification Opportunities for Jfrog and ServiceNow
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jfrog and ServiceNow is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Jfrog and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and Jfrog 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 Jfrog are associated (or correlated) with ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of Jfrog i.e., Jfrog and ServiceNow go up and down completely randomly.
Pair Corralation between Jfrog and ServiceNow
Given the investment horizon of 90 days Jfrog is expected to generate 1.72 times less return on investment than ServiceNow. In addition to that, Jfrog is 1.55 times more volatile than ServiceNow. It trades about 0.08 of its total potential returns per unit of risk. ServiceNow is currently generating about 0.22 per unit of volatility. If you would invest 89,439 in ServiceNow on August 30, 2024 and sell it today you would earn a total of 14,701 from holding ServiceNow or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Jfrog vs. ServiceNow
Performance |
| Timeline |
| Jfrog |
| ServiceNow |
Jfrog and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jfrog and ServiceNow
The main advantage of trading using opposite Jfrog and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jfrog position performs unexpectedly, ServiceNow 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 ServiceNow will offset losses from the drop in ServiceNow's long position.The idea behind Jfrog and ServiceNow 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.| ServiceNow vs. Alkami Technology | ServiceNow vs. ADEIA P | ServiceNow vs. Paycor HCM | ServiceNow vs. Envestnet |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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