Correlation Between ServiceNow and Scilex Holding
Can any of the company-specific risk be diversified away by investing in both ServiceNow and Scilex Holding 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 Scilex Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ServiceNow and Scilex Holding, you can compare the effects of market volatilities on ServiceNow and Scilex Holding 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 Scilex Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of ServiceNow and Scilex Holding.
Diversification Opportunities for ServiceNow and Scilex Holding
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ServiceNow and Scilex is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and Scilex Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scilex Holding 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 Scilex Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scilex Holding has no effect on the direction of ServiceNow i.e., ServiceNow and Scilex Holding go up and down completely randomly.
Pair Corralation between ServiceNow and Scilex Holding
Considering the 90-day investment horizon ServiceNow is expected to generate 3.58 times less return on investment than Scilex Holding. But when comparing it to its historical volatility, ServiceNow is 6.5 times less risky than Scilex Holding. It trades about 0.11 of its potential returns per unit of risk. Scilex Holding is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Scilex Holding on August 29, 2024 and sell it today you would lose (8.00) from holding Scilex Holding or give up 22.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.39% |
| Values | Daily Returns |
ServiceNow vs. Scilex Holding
Performance |
| Timeline |
| ServiceNow |
| Scilex Holding |
ServiceNow and Scilex Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ServiceNow and Scilex Holding
The main advantage of trading using opposite ServiceNow and Scilex Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ServiceNow position performs unexpectedly, Scilex Holding 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 Scilex Holding will offset losses from the drop in Scilex Holding's long position.| ServiceNow vs. Alkami Technology | ServiceNow vs. ADEIA P | ServiceNow vs. Paycor HCM | ServiceNow vs. Envestnet |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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