Correlation Between EPAM Systems and Gartner

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

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

Diversification Opportunities for EPAM Systems and Gartner

0.38

Correlation Coefficient

EPAM Systems  Gartner

Weak diversification

The 3 months correlation between EPAM and Gartner is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and Gartner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gartner and EPAM Systems 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 EPAM Systems 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 EPAM Systems i.e., EPAM Systems and Gartner go up and down completely randomly.

Pair Corralation between EPAM Systems and Gartner

Given the investment horizon of 90 days EPAM Systems is expected to under-perform the Gartner. But the stock apears to be less risky and, when comparing its historical volatility, EPAM Systems is 1.55 times less risky than Gartner. The stock trades about -0.43 of its potential returns per unit of risk. The Gartner is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  46,948  in Gartner on February 2, 2024 and sell it today you would lose (4,709) from holding Gartner or give up 10.03% of portfolio value over 90 days.

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

EPAM Systems  vs.  Gartner

EPAM Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EPAM Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with EPAM Systems and Gartner

The main advantage of trading using opposite EPAM Systems and Gartner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPAM Systems 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 EPAM Systems 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.