Correlation Between ServiceNow and Amgen
Can any of the company-specific risk be diversified away by investing in both ServiceNow and Amgen 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 ServiceNow and Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ServiceNow and Amgen Inc, you can compare the effects of market volatilities on ServiceNow and Amgen 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 ServiceNow with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of ServiceNow and Amgen.
Diversification Opportunities for ServiceNow and Amgen
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ServiceNow and Amgen is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and ServiceNow 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 ServiceNow are associated (or correlated) with Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of ServiceNow i.e., ServiceNow and Amgen go up and down completely randomly.
Pair Corralation between ServiceNow and Amgen
Considering the 90-day investment horizon ServiceNow is expected to generate 0.67 times more return on investment than Amgen. However, ServiceNow is 1.49 times less risky than Amgen. It trades about 0.34 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.22 per unit of risk. If you would invest 94,341 in ServiceNow on September 2, 2024 and sell it today you would earn a total of 10,603 from holding ServiceNow or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ServiceNow vs. Amgen Inc
Performance |
| Timeline |
| ServiceNow |
| Amgen Inc |
ServiceNow and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ServiceNow and Amgen
The main advantage of trading using opposite ServiceNow and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ServiceNow position performs unexpectedly, Amgen 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 Amgen will offset losses from the drop in Amgen's long position.| ServiceNow vs. Datadog | ServiceNow vs. Gitlab Inc | ServiceNow vs. Atlassian Corp Plc | ServiceNow vs. HubSpot |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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