Correlation Between Franklin Street and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Franklin Street 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 Franklin Street and ServiceNow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Street Properties and ServiceNow, you can compare the effects of market volatilities on Franklin Street 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 Franklin Street with a short position of ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Street and ServiceNow.
Diversification Opportunities for Franklin Street and ServiceNow
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franklin and ServiceNow is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Street Properties and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and Franklin Street 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 Franklin Street Properties 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 Franklin Street i.e., Franklin Street and ServiceNow go up and down completely randomly.
Pair Corralation between Franklin Street and ServiceNow
Considering the 90-day investment horizon Franklin Street is expected to generate 1.44 times less return on investment than ServiceNow. In addition to that, Franklin Street is 2.48 times more volatile than ServiceNow. It trades about 0.11 of its total potential returns per unit of risk. ServiceNow is currently generating about 0.4 per unit of volatility. If you would invest 94,500 in ServiceNow on August 29, 2024 and sell it today you would earn a total of 12,507 from holding ServiceNow or generate 13.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Street Properties vs. ServiceNow
Performance |
| Timeline |
| Franklin Street Prop |
| ServiceNow |
Franklin Street and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Street and ServiceNow
The main advantage of trading using opposite Franklin Street and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Street 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.| Franklin Street vs. Equity Commonwealth | Franklin Street vs. Cousins Properties Incorporated | Franklin Street vs. Creative Media Community | Franklin Street vs. Highwoods Properties |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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