Correlation Between Intuit and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Intuit 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 Intuit and ServiceNow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intuit Inc and ServiceNow, you can compare the effects of market volatilities on Intuit 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 Intuit with a short position of ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuit and ServiceNow.
Diversification Opportunities for Intuit and ServiceNow
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Intuit and ServiceNow is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Intuit Inc and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and Intuit 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 Intuit Inc 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 Intuit i.e., Intuit and ServiceNow go up and down completely randomly.
Pair Corralation between Intuit and ServiceNow
Given the investment horizon of 90 days Intuit is expected to generate 9.78 times less return on investment than ServiceNow. In addition to that, Intuit is 1.24 times more volatile than ServiceNow. It trades about 0.02 of its total potential returns per unit of risk. ServiceNow is currently generating about 0.26 per unit of volatility. If you would invest 89,003 in ServiceNow on August 26, 2024 and sell it today you would earn a total of 17,057 from holding ServiceNow or generate 19.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intuit Inc vs. ServiceNow
Performance |
| Timeline |
| Intuit Inc |
| ServiceNow |
Intuit and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intuit and ServiceNow
The main advantage of trading using opposite Intuit and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuit 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 Intuit Inc 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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