Correlation Between Gartner and International Business

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Can any of the company-specific risk be diversified away by investing in both Gartner and International Business 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 Gartner and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gartner and International Business Machines, you can compare the effects of market volatilities on Gartner and International Business 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 Gartner with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gartner and International Business.

Diversification Opportunities for Gartner and International Business

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Gartner and International is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Gartner and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Gartner 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 Gartner are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Gartner i.e., Gartner and International Business go up and down completely randomly.

Pair Corralation between Gartner and International Business

Allowing for the 90-day total investment horizon Gartner is expected to generate 1.56 times more return on investment than International Business. However, Gartner is 1.56 times more volatile than International Business Machines. It trades about -0.06 of its potential returns per unit of risk. International Business Machines is currently generating about -0.22 per unit of risk. If you would invest  28,915  in Gartner on July 1, 2022 and sell it today you would lose (776.00)  from holding Gartner or give up 2.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Gartner  vs.  International Business Machine

 Performance (%) 
       Timeline  
Gartner 
Gartner Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Gartner are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gartner unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gartner Price Channel

International Business 
International Performance
0 of 100
Over the last 90 days International Business Machines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's fundamental drivers remain relatively steady which may send shares a bit higher in October 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

International Price Channel

Gartner and International Business Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gartner and International Business

The main advantage of trading using opposite Gartner and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gartner position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.
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The idea behind Gartner and International Business Machines 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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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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