Correlation Between Autodesk and ServiceNow

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

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

Diversification Opportunities for Autodesk and ServiceNow

0.58

Correlation Coefficient

Autodesk  ServiceNow

Very weak diversification

The 3 months correlation between Autodesk and ServiceNow is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Autodesk and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and Autodesk 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 Autodesk 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 Autodesk i.e., Autodesk and ServiceNow go up and down completely randomly.

Pair Corralation between Autodesk and ServiceNow

Given the investment horizon of 90 days Autodesk is expected to generate 0.94 times more return on investment than ServiceNow. However, Autodesk is 1.07 times less risky than ServiceNow. It trades about 0.07 of its potential returns per unit of risk. ServiceNow is currently generating about -0.06 per unit of risk. If you would invest  28,007  in Autodesk on May 3, 2025 and sell it today you would earn a total of  1,695  from holding Autodesk or generate 6.05% return on investment over 90 days.

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

Autodesk  vs.  ServiceNow

Autodesk

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Autodesk are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Autodesk may actually be approaching a critical reversion point that can send shares even higher in September 2025.

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 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.

Pair Trading with Autodesk and ServiceNow

The main advantage of trading using opposite Autodesk and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autodesk 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 Autodesk 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.