Correlation Between ServiceNow and CITIGROUP

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Can any of the company-specific risk be diversified away by investing in both ServiceNow and CITIGROUP 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 CITIGROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ServiceNow and CITIGROUP FDG INC, you can compare the effects of market volatilities on ServiceNow and CITIGROUP 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 CITIGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ServiceNow and CITIGROUP.

Diversification Opportunities for ServiceNow and CITIGROUP

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ServiceNow and CITIGROUP is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and CITIGROUP FDG INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIGROUP FDG 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 CITIGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIGROUP FDG INC has no effect on the direction of ServiceNow i.e., ServiceNow and CITIGROUP go up and down completely randomly.

Pair Corralation between ServiceNow and CITIGROUP

Considering the 90-day investment horizon ServiceNow is expected to generate 0.43 times more return on investment than CITIGROUP. However, ServiceNow is 2.33 times less risky than CITIGROUP. It trades about 0.12 of its potential returns per unit of risk. CITIGROUP FDG INC is currently generating about 0.03 per unit of risk. If you would invest  55,470  in ServiceNow on September 12, 2024 and sell it today you would earn a total of  57,314  from holding ServiceNow or generate 103.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy24.77%
ValuesDaily Returns

ServiceNow  vs.  CITIGROUP FDG INC

 Performance 
       Timeline  
ServiceNow 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in ServiceNow are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, ServiceNow showed solid returns over the last few months and may actually be approaching a breakup point.
CITIGROUP FDG INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CITIGROUP FDG INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Bond's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for CITIGROUP FDG INC private investors.

ServiceNow and CITIGROUP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ServiceNow and CITIGROUP

The main advantage of trading using opposite ServiceNow and CITIGROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ServiceNow position performs unexpectedly, CITIGROUP 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 CITIGROUP will offset losses from the drop in CITIGROUP's long position.
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The idea behind ServiceNow and CITIGROUP FDG INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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