Correlation Between ServiceNow and Domo
Can any of the company-specific risk be diversified away by investing in both ServiceNow and Domo 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 Domo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ServiceNow and Domo Inc, you can compare the effects of market volatilities on ServiceNow and Domo 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 Domo. Check out your portfolio center. Please also check ongoing floating volatility patterns of ServiceNow and Domo.
Diversification Opportunities for ServiceNow and Domo
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ServiceNow and Domo is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and Domo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Domo Inc 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 Domo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Domo Inc has no effect on the direction of ServiceNow i.e., ServiceNow and Domo go up and down completely randomly.
Pair Corralation between ServiceNow and Domo
Considering the 90-day investment horizon ServiceNow is expected to generate 1.0 times more return on investment than Domo. However, ServiceNow is 1.0 times less risky than Domo. It trades about -0.11 of its potential returns per unit of risk. Domo Inc is currently generating about -0.5 per unit of risk. 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 |
ServiceNow vs. Domo Inc
Performance |
| Timeline |
| ServiceNow |
| Domo Inc |
ServiceNow and Domo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ServiceNow and Domo
The main advantage of trading using opposite ServiceNow and Domo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ServiceNow position performs unexpectedly, Domo 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 Domo will offset losses from the drop in Domo's long position.| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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