Correlation Between Medical Properties and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Medical Properties 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 Medical Properties and ServiceNow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Properties Trust, and ServiceNow, you can compare the effects of market volatilities on Medical Properties 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 Medical Properties with a short position of ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and ServiceNow.
Diversification Opportunities for Medical Properties and ServiceNow
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Medical and ServiceNow is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust, and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and Medical Properties 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 Medical Properties Trust, 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 Medical Properties i.e., Medical Properties and ServiceNow go up and down completely randomly.
Pair Corralation between Medical Properties and ServiceNow
Assuming the 90 days trading horizon Medical Properties Trust, is expected to under-perform the ServiceNow. In addition to that, Medical Properties is 1.52 times more volatile than ServiceNow. It trades about -0.01 of its total potential returns per unit of risk. ServiceNow is currently generating about 0.12 per unit of volatility. If you would invest 10,549 in ServiceNow on October 12, 2024 and sell it today you would earn a total of 1,453 from holding ServiceNow or generate 13.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Medical Properties Trust, vs. ServiceNow
Performance |
Timeline |
Medical Properties Trust, |
ServiceNow |
Medical Properties and ServiceNow Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Medical Properties and ServiceNow
The main advantage of trading using opposite Medical Properties and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties 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.Medical Properties vs. Unity Software | Medical Properties vs. Micron Technology | Medical Properties vs. Seagate Technology Holdings | Medical Properties vs. Spotify Technology SA |
ServiceNow vs. Medical Properties Trust, | ServiceNow vs. Melco Resorts Entertainment | ServiceNow vs. Fidelity National Information | ServiceNow vs. Broadcom |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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