Correlation Between ServiceNow and Gitlab

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

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

Diversification Opportunities for ServiceNow and Gitlab

0.52

Correlation Coefficient

ServiceNow  Gitlab

Very weak diversification

The 3 months correlation between ServiceNow and Gitlab is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and Gitlab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gitlab 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 Gitlab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gitlab Inc has no effect on the direction of ServiceNow i.e., ServiceNow and Gitlab go up and down completely randomly.

Pair Corralation between ServiceNow and Gitlab

Considering the 90-day investment horizon ServiceNow is expected to generate 0.8 times more return on investment than Gitlab. However, ServiceNow is 1.25 times less risky than Gitlab. It trades about 0.02 of its potential returns per unit of risk. Gitlab Inc is currently generating about -0.01 per unit of risk. If you would invest  100,534  in ServiceNow on February 15, 2025 and sell it today you would earn a total of  2,984  from holding ServiceNow or generate 2.97% return on investment over 90 days.

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

ServiceNow  vs.  Gitlab Inc

ServiceNow

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ServiceNow are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, ServiceNow may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Gitlab Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gitlab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ServiceNow and Gitlab

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

The idea behind ServiceNow and Gitlab Inc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.