Correlation Between ServiceNow and Mosaic

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

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

Diversification Opportunities for ServiceNow and Mosaic

0.04

Correlation Coefficient

ServiceNow  Mosaic

Significant diversification

The 3 months correlation between ServiceNow and Mosaic is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and The Mosaic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mosaic 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 Mosaic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mosaic has no effect on the direction of ServiceNow i.e., ServiceNow and Mosaic go up and down completely randomly.

Pair Corralation between ServiceNow and Mosaic

Considering the 90-day investment horizon ServiceNow is expected to under-perform the Mosaic. In addition to that, ServiceNow is 1.12 times more volatile than The Mosaic. It trades about -0.17 of its total potential returns per unit of risk. The Mosaic is currently generating about 0.11 per unit of volatility. If you would invest  2,378  in The Mosaic on December 29, 2024 and sell it today you would earn a total of  347.00  from holding The Mosaic or generate 14.59% return on investment over 90 days.

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

ServiceNow  vs.  The Mosaic

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.

Mosaic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Mosaic are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Mosaic unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ServiceNow and Mosaic

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

The idea behind ServiceNow and The Mosaic 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 Transaction History module to view history of all your transactions and understand their impact on performance.