Correlation Between Deckers Outdoor and Gartner

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

By analyzing existing cross correlation between Deckers Outdoor and Gartner, you can compare the effects of market volatilities on Deckers Outdoor 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 Deckers Outdoor with a short position of Gartner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deckers Outdoor and Gartner.

Diversification Opportunities for Deckers Outdoor and Gartner

0.58

Correlation Coefficient

Deckers Outdoor  Gartner

Very weak diversification

The 3 months correlation between Deckers and Gartner is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Deckers Outdoor and Gartner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gartner and Deckers Outdoor 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 Deckers Outdoor 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 Deckers Outdoor i.e., Deckers Outdoor and Gartner go up and down completely randomly.

Pair Corralation between Deckers Outdoor and Gartner

Given the investment horizon of 90 days Deckers Outdoor is expected to under-perform the Gartner. In addition to that, Deckers Outdoor is 1.97 times more volatile than Gartner. It trades about -0.2 of its total potential returns per unit of risk. Gartner is currently generating about -0.23 per unit of volatility. If you would invest  47,744  in Gartner on January 29, 2024 and sell it today you would lose (2,866) from holding Gartner or give up 6.0% of portfolio value over 90 days.

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

Deckers Outdoor  vs.  Gartner

Deckers Outdoor

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Deckers Outdoor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Deckers Outdoor may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Gartner

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gartner has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gartner is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Deckers Outdoor and Gartner

The main advantage of trading using opposite Deckers Outdoor and Gartner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deckers Outdoor 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.

The idea behind Deckers Outdoor and Gartner 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..