Correlation Between OZ Minerals and ServiceNow

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Can any of the company-specific risk be diversified away by investing in both OZ Minerals 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 OZ Minerals and ServiceNow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OZ Minerals Limited and ServiceNow, you can compare the effects of market volatilities on OZ Minerals 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 OZ Minerals with a short position of ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of OZ Minerals and ServiceNow.

Diversification Opportunities for OZ Minerals and ServiceNow

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between OZMLF and ServiceNow is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding OZ Minerals Limited and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and OZ Minerals 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 OZ Minerals Limited 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 OZ Minerals i.e., OZ Minerals and ServiceNow go up and down completely randomly.

Pair Corralation between OZ Minerals and ServiceNow

If you would invest  102,210  in ServiceNow on September 20, 2024 and sell it today you would earn a total of  9,262  from holding ServiceNow or generate 9.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy4.76%
ValuesDaily Returns

OZ Minerals Limited  vs.  ServiceNow

 Performance 
       Timeline  
OZ Minerals Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days OZ Minerals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, OZ Minerals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
ServiceNow 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ServiceNow are ranked lower than 13 (%) 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.

OZ Minerals and ServiceNow Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with OZ Minerals and ServiceNow

The main advantage of trading using opposite OZ Minerals and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OZ Minerals 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 OZ Minerals Limited 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.
Check out your portfolio center.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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