Correlation Between ServiceNow and Eastern
Can any of the company-specific risk be diversified away by investing in both ServiceNow and Eastern 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 Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ServiceNow and Eastern Co, you can compare the effects of market volatilities on ServiceNow and Eastern 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 Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of ServiceNow and Eastern.
Diversification Opportunities for ServiceNow and Eastern
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ServiceNow and Eastern is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of ServiceNow i.e., ServiceNow and Eastern go up and down completely randomly.
Pair Corralation between ServiceNow and Eastern
Considering the 90-day investment horizon ServiceNow is expected to generate 0.65 times more return on investment than Eastern. However, ServiceNow is 1.53 times less risky than Eastern. It trades about 0.1 of its potential returns per unit of risk. Eastern Co is currently generating about 0.06 per unit of risk. If you would invest 59,716 in ServiceNow on August 29, 2024 and sell it today you would earn a total of 44,424 from holding ServiceNow or generate 74.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ServiceNow vs. Eastern Co
Performance |
| Timeline |
| ServiceNow |
| Eastern |
ServiceNow and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ServiceNow and Eastern
The main advantage of trading using opposite ServiceNow and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ServiceNow position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern's long position.| ServiceNow vs. Autodesk | ServiceNow vs. Intuit Inc | ServiceNow vs. Zoom Video Communications | ServiceNow vs. Snowflake |
| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. AB SKF | Eastern vs. Kennametal |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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