Correlation Between Gap, and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Gap, 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 Gap, and ServiceNow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gap, and ServiceNow, you can compare the effects of market volatilities on Gap, 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 Gap, with a short position of ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and ServiceNow.
Diversification Opportunities for Gap, and ServiceNow
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gap, and ServiceNow is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and Gap, 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 The Gap, 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 Gap, i.e., Gap, and ServiceNow go up and down completely randomly.
Pair Corralation between Gap, and ServiceNow
Considering the 90-day investment horizon Gap, is expected to generate 1.06 times less return on investment than ServiceNow. In addition to that, Gap, is 1.72 times more volatile than ServiceNow. It trades about 0.06 of its total potential returns per unit of risk. ServiceNow is currently generating about 0.12 per unit of volatility. If you would invest 37,856 in ServiceNow on August 31, 2024 and sell it today you would earn a total of 67,088 from holding ServiceNow or generate 177.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gap, vs. ServiceNow
Performance |
| Timeline |
| Gap, |
| ServiceNow |
Gap, and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gap, and ServiceNow
The main advantage of trading using opposite Gap, and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap, 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.| Gap, vs. SEI Investments | Gap, vs. Corporacion America Airports | Gap, vs. Nasdaq Inc | Gap, vs. Sabra Healthcare REIT |
| ServiceNow vs. Autodesk | ServiceNow vs. Intuit Inc | ServiceNow vs. Zoom Video Communications | ServiceNow vs. Snowflake |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |