Correlation Between MQGAU and ServiceNow

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

By analyzing existing cross correlation between MQGAU 134 12 JAN 27 and ServiceNow, you can compare the effects of market volatilities on MQGAU 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 MQGAU with a short position of ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of MQGAU and ServiceNow.

Diversification Opportunities for MQGAU and ServiceNow

-0.48

Correlation Coefficient

MQGAU  ServiceNow

Very good diversification

The 3 months correlation between MQGAU and ServiceNow is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding MQGAU 134 12 JAN 27 and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and MQGAU 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 MQGAU 134 12 JAN 27 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 MQGAU i.e., MQGAU and ServiceNow go up and down completely randomly.

Pair Corralation between MQGAU and ServiceNow

Assuming the 90 days trading horizon MQGAU is expected to generate 4.04 times less return on investment than ServiceNow. But when comparing it to its historical volatility, MQGAU 134 12 JAN 27 is 6.13 times less risky than ServiceNow. It trades about 0.13 of its potential returns per unit of risk. ServiceNow is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  42,226  in ServiceNow on December 4, 2024 and sell it today you would earn a total of  46,974  from holding ServiceNow or generate 111.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	33.2%
Values	Daily Returns

MQGAU 134 12 JAN 27  vs.  ServiceNow

MQGAU 134 12

Risk-Adjusted Performance

Very Weak

Over the last 90 days MQGAU 134 12 JAN 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MQGAU is not utilizing all of its potentials. The latest 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 MQGAU and ServiceNow

The main advantage of trading using opposite MQGAU and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MQGAU 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 MQGAU 134 12 JAN 27 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.