Correlation Between ServiceNow and Champion Gaming

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

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

Diversification Opportunities for ServiceNow and Champion Gaming

0.49

Correlation Coefficient

ServiceNow  Champion Gaming

Very weak diversification

The 3 months correlation between ServiceNow and Champion is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and Champion Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Gaming Group 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 Champion Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Gaming Group has no effect on the direction of ServiceNow i.e., ServiceNow and Champion Gaming go up and down completely randomly.

Pair Corralation between ServiceNow and Champion Gaming

Considering the 90-day investment horizon ServiceNow is expected to generate 0.21 times more return on investment than Champion Gaming. However, ServiceNow is 4.7 times less risky than Champion Gaming. It trades about -0.16 of its potential returns per unit of risk. Champion Gaming Group is currently generating about -0.13 per unit of risk. If you would invest  108,826  in ServiceNow on December 23, 2024 and sell it today you would lose (26,051) from holding ServiceNow or give up 23.94% of portfolio value over 90 days.

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

ServiceNow  vs.  Champion Gaming Group

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.

Champion Gaming Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Champion Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with ServiceNow and Champion Gaming

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

The idea behind ServiceNow and Champion Gaming Group 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.