Correlation Between Integral and ServiceNow

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

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

Diversification Opportunities for Integral and ServiceNow

0.21

Correlation Coefficient

Integral  ServiceNow

Modest diversification

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

Pair Corralation between Integral and ServiceNow

Considering the 90-day investment horizon Integral Ad Science is expected to under-perform the ServiceNow. In addition to that, Integral is 1.66 times more volatile than ServiceNow. It trades about 0.0 of its total potential returns per unit of risk. ServiceNow is currently generating about 0.22 per unit of volatility. If you would invest  83,586  in ServiceNow on September 2, 2024 and sell it today you would earn a total of  21,358  from holding ServiceNow or generate 25.55% return on investment over 90 days.

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

Integral Ad Science  vs.  ServiceNow

Integral Ad Science

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integral Ad Science has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Integral is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ServiceNow

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ServiceNow are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, ServiceNow showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Integral and ServiceNow

The main advantage of trading using opposite Integral and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integral 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 Integral Ad Science 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.