Correlation Between ServiceNow and LENSAR
Can any of the company-specific risk be diversified away by investing in both ServiceNow and LENSAR 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 LENSAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ServiceNow and LENSAR Inc, you can compare the effects of market volatilities on ServiceNow and LENSAR 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 LENSAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of ServiceNow and LENSAR.
Diversification Opportunities for ServiceNow and LENSAR
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ServiceNow and LENSAR is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR 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 LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of ServiceNow i.e., ServiceNow and LENSAR go up and down completely randomly.
Pair Corralation between ServiceNow and LENSAR
Considering the 90-day investment horizon ServiceNow is expected to generate 0.68 times more return on investment than LENSAR. However, ServiceNow is 1.46 times less risky than LENSAR. It trades about 0.24 of its potential returns per unit of risk. LENSAR Inc is currently generating about 0.16 per unit of risk. If you would invest 104,829 in ServiceNow on September 13, 2024 and sell it today you would earn a total of 9,889 from holding ServiceNow or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ServiceNow vs. LENSAR Inc
Performance |
| Timeline |
| ServiceNow |
| LENSAR Inc |
ServiceNow and LENSAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ServiceNow and LENSAR
The main advantage of trading using opposite ServiceNow and LENSAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ServiceNow position performs unexpectedly, LENSAR 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 LENSAR will offset losses from the drop in LENSAR's long position.| ServiceNow vs. Bill Com Holdings | ServiceNow vs. Datadog | ServiceNow vs. Gitlab Inc | ServiceNow vs. Atlassian Corp Plc |
| LENSAR vs. Avita Medical | LENSAR vs. Sight Sciences | LENSAR vs. Treace Medical Concepts | LENSAR vs. Neuropace |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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