Correlation Between NIP Group and ServiceNow

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

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

Diversification Opportunities for NIP Group and ServiceNow

0.74

Correlation Coefficient

NIP Group  ServiceNow

Poor diversification

The 3 months correlation between NIP and ServiceNow is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NIP Group American and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and NIP Group 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 NIP Group American 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 NIP Group i.e., NIP Group and ServiceNow go up and down completely randomly.

Pair Corralation between NIP Group and ServiceNow

Given the investment horizon of 90 days NIP Group American is expected to under-perform the ServiceNow. In addition to that, NIP Group is 4.35 times more volatile than ServiceNow. It trades about -0.07 of its total potential returns per unit of risk. ServiceNow is currently generating about 0.08 per unit of volatility. If you would invest  46,303  in ServiceNow on December 4, 2024 and sell it today you would earn a total of  42,897  from holding ServiceNow or generate 92.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	31.71%
Values	Daily Returns

NIP Group American  vs.  ServiceNow

NIP Group American

Risk-Adjusted Performance

Very Weak

Over the last 90 days NIP Group American has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ServiceNow

Risk-Adjusted Performance

Very Weak

Over the last 90 days ServiceNow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with NIP Group and ServiceNow

The main advantage of trading using opposite NIP Group and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIP Group 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 NIP Group American 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.