Correlation Between Gartner and Hewlett Packard

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

Diversification Opportunities for Gartner and Hewlett Packard

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between Gartner and Hewlett is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Gartner and Hewlett Packard Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hewlett Packard Ente 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 Hewlett Packard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hewlett Packard Ente has no effect on the direction of Gartner i.e., Gartner and Hewlett Packard go up and down completely randomly.

Pair Corralation between Gartner and Hewlett Packard

Allowing for the 90-day total investment horizon Gartner is expected to generate 0.89 times more return on investment than Hewlett Packard. However, Gartner is 1.12 times less risky than Hewlett Packard. It trades about 0.06 of its potential returns per unit of risk. Hewlett Packard Enterprise is currently generating about 0.03 per unit of risk. If you would invest  28,879  in Gartner on December 30, 2023 and sell it today you would earn a total of  18,788  from holding Gartner or generate 65.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Gartner  vs.  Hewlett Packard Enterprise

 Performance 
       Timeline  
Gartner 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
Modest
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 conflicting basic indicators, Gartner may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Hewlett Packard Ente 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Hewlett Packard Enterprise are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Hewlett Packard may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Gartner and Hewlett Packard Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gartner and Hewlett Packard

The main advantage of trading using opposite Gartner and Hewlett Packard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gartner position performs unexpectedly, Hewlett Packard 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 Hewlett Packard will offset losses from the drop in Hewlett Packard's long position.
The idea behind Gartner and Hewlett Packard Enterprise 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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