Correlation Between LifeSpeak and ServiceNow

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

Diversification Opportunities for LifeSpeak and ServiceNow

LifeSpeakServiceNowDiversified AwayLifeSpeakServiceNowDiversified Away100%
-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between LifeSpeak and ServiceNow is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding LifeSpeak and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and LifeSpeak 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 LifeSpeak 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 LifeSpeak i.e., LifeSpeak and ServiceNow go up and down completely randomly.

Pair Corralation between LifeSpeak and ServiceNow

Assuming the 90 days horizon LifeSpeak is expected to under-perform the ServiceNow. In addition to that, LifeSpeak is 2.19 times more volatile than ServiceNow. It trades about -0.07 of its total potential returns per unit of risk. ServiceNow is currently generating about -0.02 per unit of volatility. If you would invest  102,298  in ServiceNow on November 20, 2024 and sell it today you would lose (3,635) from holding ServiceNow or give up 3.55% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy93.65%
ValuesDaily Returns

LifeSpeak  vs.  ServiceNow

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -40-30-20-10010
JavaScript chart by amCharts 3.21.15LSPKF NOW
       Timeline  
LifeSpeak 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days LifeSpeak has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.240.260.280.30.320.340.360.380.4
ServiceNow 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days ServiceNow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ServiceNow is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1,0001,0501,1001,1501,200

LifeSpeak and ServiceNow Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.07-6.04-4.02-1.99-0.03141.793.685.567.459.33 0.010.020.030.040.050.060.070.08
JavaScript chart by amCharts 3.21.15LSPKF NOW
       Returns  

Pair Trading with LifeSpeak and ServiceNow

The main advantage of trading using opposite LifeSpeak and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LifeSpeak 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 LifeSpeak 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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