Correlation Between ServiceNow and Unisys

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

By analyzing existing cross correlation between ServiceNow and Unisys, you can compare the effects of market volatilities on ServiceNow and Unisys 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 Unisys. Check out your portfolio center. Please also check ongoing floating volatility patterns of ServiceNow and Unisys.

Diversification Opportunities for ServiceNow and Unisys

0.27

Correlation Coefficient

ServiceNow  Unisys

Modest diversification

The 3 months correlation between ServiceNow and Unisys is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and Unisys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unisys 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 Unisys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unisys has no effect on the direction of ServiceNow i.e., ServiceNow and Unisys go up and down completely randomly.

Pair Corralation between ServiceNow and Unisys

Considering the 90-day investment horizon ServiceNow is expected to generate 1.55 times less return on investment than Unisys. But when comparing it to its historical volatility, ServiceNow is 2.81 times less risky than Unisys. It trades about 0.12 of its potential returns per unit of risk. Unisys is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  325.00  in Unisys on January 25, 2024 and sell it today you would earn a total of  223.00  from holding Unisys or generate 68.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ServiceNow  vs.  Unisys

ServiceNow

Risk-Adjusted Performance

0 of 100

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 fairly stable basic indicators, ServiceNow is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Unisys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unisys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ServiceNow and Unisys

The main advantage of trading using opposite ServiceNow and Unisys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ServiceNow position performs unexpectedly, Unisys 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 Unisys will offset losses from the drop in Unisys' long position.

The idea behind ServiceNow and Unisys 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 Directory module to find actively traded commodities issued by global exchanges.