Correlation Between Gartner and F5 Networks
Can any of the company-specific risk be diversified away by investing in both Gartner and F5 Networks 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 F5 Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gartner and F5 Networks, you can compare the effects of market volatilities on Gartner and F5 Networks 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 F5 Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gartner and F5 Networks.
Diversification Opportunities for Gartner and F5 Networks
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gartner and FFIV is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Gartner and F5 Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F5 Networks 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 F5 Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F5 Networks has no effect on the direction of Gartner i.e., Gartner and F5 Networks go up and down completely randomly.
Pair Corralation between Gartner and F5 Networks
Allowing for the 90-day total investment horizon Gartner is expected to under-perform the F5 Networks. But the stock apears to be less risky and, when comparing its historical volatility, Gartner is 1.1 times less risky than F5 Networks. The stock trades about -0.27 of its potential returns per unit of risk. The F5 Networks is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 18,953 in F5 Networks on January 20, 2024 and sell it today you would lose (994.00) from holding F5 Networks or give up 5.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gartner vs. F5 Networks
Performance |
| Timeline |
| Gartner |
| F5 Networks |
Gartner and F5 Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gartner and F5 Networks
The main advantage of trading using opposite Gartner and F5 Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gartner position performs unexpectedly, F5 Networks 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 F5 Networks will offset losses from the drop in F5 Networks' long position.| Gartner vs. Information Services Group | Gartner vs. Home Bancorp | Gartner vs. CRA International | Gartner vs. Aquagold International |
| F5 Networks vs. VeriSign | F5 Networks vs. Check Point Software | F5 Networks vs. Qualys Inc | F5 Networks vs. CyberArk Software |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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