Correlation Between ServiceNow and National Storage

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

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

Diversification Opportunities for ServiceNow and National Storage

-0.09

Correlation Coefficient

ServiceNow  National Storage

Good diversification

The 3 months correlation between ServiceNow and National is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and National Storage REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage REIT 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 National Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storage REIT has no effect on the direction of ServiceNow i.e., ServiceNow and National Storage go up and down completely randomly.

Pair Corralation between ServiceNow and National Storage

Considering the 90-day investment horizon ServiceNow is expected to under-perform the National Storage. But the stock apears to be less risky and, when comparing its historical volatility, ServiceNow is 2.09 times less risky than National Storage. The stock trades about -0.06 of its potential returns per unit of risk. The National Storage REIT is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  139.00  in National Storage REIT on May 5, 2025 and sell it today you would earn a total of  21.00  from holding National Storage REIT or generate 15.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

ServiceNow  vs.  National Storage REIT

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.

National Storage REIT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Storage REIT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, National Storage reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ServiceNow and National Storage

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

The idea behind ServiceNow and National Storage REIT 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.