Correlation Between International Business and Gartner
Can any of the company-specific risk be diversified away by investing in both International Business and Gartner 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 International Business and Gartner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and Gartner, you can compare the effects of market volatilities on International Business and Gartner 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 International Business with a short position of Gartner. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Gartner.
Diversification Opportunities for International Business and Gartner
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between International and Gartner is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Gartner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gartner and International Business 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 International Business Machines are associated (or correlated) with Gartner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gartner has no effect on the direction of International Business i.e., International Business and Gartner go up and down completely randomly.
Pair Corralation between International Business and Gartner
Considering the 90-day investment horizon International Business Machines is expected to under-perform the Gartner. But the stock apears to be less risky and, when comparing its historical volatility, International Business Machines is 1.07 times less risky than Gartner. The stock trades about -0.18 of its potential returns per unit of risk. The Gartner is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 46,359 in Gartner on February 13, 2024 and sell it today you would lose (2,432) from holding Gartner or give up 5.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. Gartner
Performance |
| Timeline |
| International Business |
| Gartner |
International Business and Gartner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Gartner
The main advantage of trading using opposite International Business and Gartner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Gartner 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 Gartner will offset losses from the drop in Gartner's long position.| International Business vs. HP Inc | International Business vs. NK Lukoil PAO | International Business vs. Merck Company | International Business vs. Johnson Johnson |
| Gartner vs. Accenture plc | Gartner vs. International Business Machines | Gartner vs. Infosys Ltd ADR | Gartner vs. Cognizant Technology Solutions |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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