Correlation Between Freeport and ServiceNow

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

By analyzing existing cross correlation between Freeport McMoRan 545 percent and ServiceNow, you can compare the effects of market volatilities on Freeport 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 Freeport with a short position of ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport and ServiceNow.

Diversification Opportunities for Freeport and ServiceNow

0.03

Correlation Coefficient

Freeport  ServiceNow

Significant diversification

The 3 months correlation between Freeport and ServiceNow is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan 545 percent and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and Freeport 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 Freeport McMoRan 545 percent 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 Freeport i.e., Freeport and ServiceNow go up and down completely randomly.

Pair Corralation between Freeport and ServiceNow

Assuming the 90 days trading horizon Freeport McMoRan 545 percent is expected to generate 0.52 times more return on investment than ServiceNow. However, Freeport McMoRan 545 percent is 1.92 times less risky than ServiceNow. It trades about 0.0 of its potential returns per unit of risk. ServiceNow is currently generating about -0.14 per unit of risk. If you would invest  9,415  in Freeport McMoRan 545 percent on December 25, 2024 and sell it today you would lose (59.00) from holding Freeport McMoRan 545 percent or give up 0.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Freeport McMoRan 545 percent  vs.  ServiceNow

Freeport McMoRan 545

Risk-Adjusted Performance

Very Weak

Over the last 90 days Freeport McMoRan 545 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freeport is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Freeport and ServiceNow

The main advantage of trading using opposite Freeport and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport 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 Freeport McMoRan 545 percent 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.