Correlation Between ServiceNow and Schulz SA

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

By analyzing existing cross correlation between ServiceNow and Schulz SA, you can compare the effects of market volatilities on ServiceNow and Schulz SA 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 Schulz SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ServiceNow and Schulz SA.

Diversification Opportunities for ServiceNow and Schulz SA

-0.84

Correlation Coefficient

ServiceNow  Schulz SA

Pay attention - limited upside

The 3 months correlation between ServiceNow and Schulz is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and Schulz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schulz SA 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 Schulz SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schulz SA has no effect on the direction of ServiceNow i.e., ServiceNow and Schulz SA go up and down completely randomly.

Pair Corralation between ServiceNow and Schulz SA

Assuming the 90 days trading horizon ServiceNow is expected to generate 1.51 times more return on investment than Schulz SA. However, ServiceNow is 1.51 times more volatile than Schulz SA. It trades about 0.27 of its potential returns per unit of risk. Schulz SA is currently generating about -0.19 per unit of risk. If you would invest  9,405  in ServiceNow on September 4, 2024 and sell it today you would earn a total of  3,406  from holding ServiceNow or generate 36.21% return on investment over 90 days.

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

ServiceNow  vs.  Schulz SA

ServiceNow

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ServiceNow are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ServiceNow sustained solid returns over the last few months and may actually be approaching a breakup point.

Schulz SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schulz SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock'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 the firm private investors.

Pair Trading with ServiceNow and Schulz SA

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

The idea behind ServiceNow and Schulz SA 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.