Correlation Between FactSet Research and ServiceNow

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

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

Diversification Opportunities for FactSet Research and ServiceNow

0.61

Correlation Coefficient

FactSet Research  ServiceNow

Poor diversification

The 3 months correlation between FactSet and ServiceNow is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding FactSet Research Systems and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow and FactSet Research 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 FactSet Research Systems 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 FactSet Research i.e., FactSet Research and ServiceNow go up and down completely randomly.

Pair Corralation between FactSet Research and ServiceNow

Considering the 90-day investment horizon FactSet Research is expected to generate 2.55 times less return on investment than ServiceNow. But when comparing it to its historical volatility, FactSet Research Systems is 1.62 times less risky than ServiceNow. It trades about 0.03 of its potential returns per unit of risk. ServiceNow is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  45,229  in ServiceNow on February 14, 2024 and sell it today you would earn a total of  27,783  from holding ServiceNow or generate 61.43% return on investment over 90 days.

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

FactSet Research Systems  vs.  ServiceNow

FactSet Research Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FactSet Research Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, FactSet Research 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

0 of 100

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 latest conflicting performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with FactSet Research and ServiceNow

The main advantage of trading using opposite FactSet Research and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FactSet Research 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 FactSet Research Systems 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.