Correlation Between Nextplat Corp and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Nextplat 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 Nextplat Corp and ServiceNow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextplat Corp and ServiceNow, you can compare the effects of market volatilities on Nextplat 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 Nextplat Corp with a short position of ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextplat Corp and ServiceNow.
Diversification Opportunities for Nextplat Corp and ServiceNow
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nextplat and ServiceNow is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nextplat Corp and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and Nextplat 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 Nextplat 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 Nextplat Corp i.e., Nextplat Corp and ServiceNow go up and down completely randomly.
Pair Corralation between Nextplat Corp and ServiceNow
Given the investment horizon of 90 days Nextplat Corp is expected to under-perform the ServiceNow. In addition to that, Nextplat Corp is 3.17 times more volatile than ServiceNow. It trades about -0.04 of its total potential returns per unit of risk. ServiceNow is currently generating about -0.07 per unit of volatility. If you would invest 77,134 in ServiceNow on January 30, 2024 and sell it today you would lose (4,779) from holding ServiceNow or give up 6.2% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Nextplat Corp vs. ServiceNow
Performance |
Timeline |
Nextplat Corp |
ServiceNow |
Nextplat Corp and ServiceNow Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nextplat Corp and ServiceNow
The main advantage of trading using opposite Nextplat Corp and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextplat 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.Nextplat Corp vs. RenoWorks Software | Nextplat Corp vs. LifeSpeak | Nextplat Corp vs. 01 Communique Laboratory | Nextplat Corp vs. Where Food Comes |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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