Correlation Between Canada Goose and ServiceNow

Can any of the company-specific risk be diversified away by investing in both Canada Goose and ServiceNow 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 Canada Goose and ServiceNow into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canada Goose Holdings and ServiceNow, you can compare the effects of market volatilities on Canada Goose and ServiceNow 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 Canada Goose with a short position of ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canada Goose and ServiceNow.

Diversification Opportunities for Canada Goose and ServiceNow

-0.7

Correlation Coefficient

Canada Goose  ServiceNow

Excellent diversification

The 3 months correlation between Canada and ServiceNow is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Canada Goose Holdings and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and Canada Goose 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 Canada Goose Holdings are associated (or correlated) with ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of Canada Goose i.e., Canada Goose and ServiceNow go up and down completely randomly.

Pair Corralation between Canada Goose and ServiceNow

Given the investment horizon of 90 days Canada Goose Holdings is expected to under-perform the ServiceNow. In addition to that, Canada Goose is 1.46 times more volatile than ServiceNow. It trades about -0.02 of its total potential returns per unit of risk. ServiceNow is currently generating about 0.11 per unit of volatility. If you would invest  38,550  in ServiceNow on September 23, 2024 and sell it today you would earn a total of  70,575  from holding ServiceNow or generate 183.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Canada Goose Holdings  vs.  ServiceNow

Canada Goose Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Goose Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Canada Goose is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ServiceNow

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ServiceNow are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, ServiceNow showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canada Goose and ServiceNow

The main advantage of trading using opposite Canada Goose and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canada Goose position performs unexpectedly, ServiceNow 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 ServiceNow will offset losses from the drop in ServiceNow's long position.

The idea behind Canada Goose Holdings and ServiceNow 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.