Correlation Between ServiceNow and Bowmo

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

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

Diversification Opportunities for ServiceNow and Bowmo

0.31

Correlation Coefficient

ServiceNow  Bowmo

Weak diversification

The 3 months correlation between ServiceNow and Bowmo is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ServiceNow and Bowmo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowmo 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 Bowmo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowmo Inc has no effect on the direction of ServiceNow i.e., ServiceNow and Bowmo go up and down completely randomly.

Pair Corralation between ServiceNow and Bowmo

Considering the 90-day investment horizon ServiceNow is expected to generate 14.87 times less return on investment than Bowmo. But when comparing it to its historical volatility, ServiceNow is 16.69 times less risky than Bowmo. It trades about 0.1 of its potential returns per unit of risk. Bowmo Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2.01  in Bowmo Inc on September 12, 2024 and sell it today you would lose (1.93) from holding Bowmo Inc or give up 96.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

ServiceNow  vs.  Bowmo Inc

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 conflicting basic indicators, ServiceNow showed solid returns over the last few months and may actually be approaching a breakup point.

Bowmo Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bowmo Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Bowmo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ServiceNow and Bowmo

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

The idea behind ServiceNow and Bowmo 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.