Correlation Between Xerox Corp and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Xerox Corp 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 Xerox Corp and ServiceNow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xerox Corp and ServiceNow, you can compare the effects of market volatilities on Xerox Corp 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 Xerox Corp with a short position of ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xerox Corp and ServiceNow.
Diversification Opportunities for Xerox Corp and ServiceNow
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xerox and ServiceNow is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Xerox Corp and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and Xerox Corp 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 Xerox Corp 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 Xerox Corp i.e., Xerox Corp and ServiceNow go up and down completely randomly.
Pair Corralation between Xerox Corp and ServiceNow
Considering the 90-day investment horizon Xerox Corp is expected to under-perform the ServiceNow. In addition to that, Xerox Corp is 1.51 times more volatile than ServiceNow. It trades about -0.34 of its total potential returns per unit of risk. ServiceNow is currently generating about -0.11 per unit of volatility. If you would invest 77,857 in ServiceNow on January 26, 2024 and sell it today you would lose (3,228) from holding ServiceNow or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xerox Corp vs. ServiceNow
Performance |
| Timeline |
| Xerox Corp |
| ServiceNow |
Xerox Corp and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xerox Corp and ServiceNow
The main advantage of trading using opposite Xerox Corp and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xerox Corp 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.| Xerox Corp vs. Infosys Ltd ADR | Xerox Corp vs. Cognizant Technology Solutions | Xerox Corp vs. Fidelity National Information | Xerox Corp vs. Jack Henry Associates |
| ServiceNow vs. Autodesk | ServiceNow vs. Intuit Inc | ServiceNow vs. Zoom Video Communications | ServiceNow vs. Snowflake |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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