Correlation Between ENTERPRISE and ServiceNow

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

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

Diversification Opportunities for ENTERPRISE and ServiceNow

0.21

Correlation Coefficient

ENTERPRISE  ServiceNow

Modest diversification

The 3 months correlation between ENTERPRISE and ServiceNow is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ENTERPRISE PRODS OPER and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and ENTERPRISE 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 ENTERPRISE PRODS OPER 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 ENTERPRISE i.e., ENTERPRISE and ServiceNow go up and down completely randomly.

Pair Corralation between ENTERPRISE and ServiceNow

Assuming the 90 days trading horizon ENTERPRISE PRODS OPER is expected to generate 0.32 times more return on investment than ServiceNow. However, ENTERPRISE PRODS OPER is 3.17 times less risky than ServiceNow. It trades about 0.13 of its potential returns per unit of risk. ServiceNow is currently generating about -0.12 per unit of risk. If you would invest  8,677  in ENTERPRISE PRODS OPER on May 21, 2025 and sell it today you would earn a total of  361.00  from holding ENTERPRISE PRODS OPER or generate 4.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.55%
Values	Daily Returns

ENTERPRISE PRODS OPER  vs.  ServiceNow

ENTERPRISE PRODS OPER

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in ENTERPRISE PRODS OPER are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ENTERPRISE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ServiceNow

Risk-Adjusted Performance

Weakest

Over the last 90 days ServiceNow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in September 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with ENTERPRISE and ServiceNow

The main advantage of trading using opposite ENTERPRISE and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENTERPRISE 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 ENTERPRISE PRODS OPER 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 Stocks Directory module to find actively traded stocks across global markets.