Correlation Between ServiceNow and Lyxor 1

Can any of the company-specific risk be diversified away by investing in both ServiceNow and Lyxor 1 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 Lyxor 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ServiceNow and Lyxor 1 , you can compare the effects of market volatilities on ServiceNow and Lyxor 1 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 Lyxor 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of ServiceNow and Lyxor 1.

Diversification Opportunities for ServiceNow and Lyxor 1

0.31

Correlation Coefficient

ServiceNow  Lyxor 1

Weak diversification

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

Pair Corralation between ServiceNow and Lyxor 1

Assuming the 90 days horizon ServiceNow is expected to under-perform the Lyxor 1. In addition to that, ServiceNow is 1.68 times more volatile than Lyxor 1 . It trades about -0.01 of its total potential returns per unit of risk. Lyxor 1 is currently generating about 0.13 per unit of volatility. If you would invest  2,611  in Lyxor 1 on April 25, 2025 and sell it today you would earn a total of  191.00  from holding Lyxor 1 or generate 7.32% return on investment over 90 days.

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

ServiceNow  vs.  Lyxor 1

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. Despite nearly stable basic indicators, ServiceNow is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lyxor 1

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Lyxor 1 may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with ServiceNow and Lyxor 1

The main advantage of trading using opposite ServiceNow and Lyxor 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ServiceNow position performs unexpectedly, Lyxor 1 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 Lyxor 1 will offset losses from the drop in Lyxor 1's long position.

The idea behind ServiceNow and Lyxor 1 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.