Correlation Between ServiceNow and Live Ventures

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

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

Diversification Opportunities for ServiceNow and Live Ventures

-0.75

Correlation Coefficient

ServiceNow  Live Ventures

Pay attention - limited upside

The 3 months correlation between ServiceNow and Live is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and Live Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Ventures 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 Live Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Ventures has no effect on the direction of ServiceNow i.e., ServiceNow and Live Ventures go up and down completely randomly.

Pair Corralation between ServiceNow and Live Ventures

Considering the 90-day investment horizon ServiceNow is expected to generate 0.53 times more return on investment than Live Ventures. However, ServiceNow is 1.89 times less risky than Live Ventures. It trades about 0.16 of its potential returns per unit of risk. Live Ventures is currently generating about -0.12 per unit of risk. If you would invest  76,552  in ServiceNow on September 21, 2024 and sell it today you would earn a total of  33,253  from holding ServiceNow or generate 43.44% return on investment over 90 days.

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

ServiceNow  vs.  Live Ventures

ServiceNow

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ServiceNow are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, ServiceNow showed solid returns over the last few months and may actually be approaching a breakup point.

Live Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Live Ventures 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 Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with ServiceNow and Live Ventures

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

The idea behind ServiceNow and Live Ventures 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.