Correlation Between ServiceNow and Indivior PLC

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

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

Diversification Opportunities for ServiceNow and Indivior PLC

0.86

Correlation Coefficient

ServiceNow  Indivior PLC

Very poor diversification

The 3 months correlation between ServiceNow and Indivior is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and Indivior PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indivior PLC 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 Indivior PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indivior PLC has no effect on the direction of ServiceNow i.e., ServiceNow and Indivior PLC go up and down completely randomly.

Pair Corralation between ServiceNow and Indivior PLC

Considering the 90-day investment horizon ServiceNow is expected to generate 1.94 times less return on investment than Indivior PLC. In addition to that, ServiceNow is 1.23 times more volatile than Indivior PLC. It trades about 0.1 of its total potential returns per unit of risk. Indivior PLC is currently generating about 0.23 per unit of volatility. If you would invest  2,310  in Indivior PLC on October 4, 2024 and sell it today you would earn a total of  84.00  from holding Indivior PLC or generate 3.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	2.67%
Values	Daily Returns

ServiceNow  vs.  Indivior PLC

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 weak basic indicators, ServiceNow showed solid returns over the last few months and may actually be approaching a breakup point.

Indivior PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indivior PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Indivior PLC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ServiceNow and Indivior PLC

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

The idea behind ServiceNow and Indivior PLC 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.