Correlation Between Information Services and Gartner

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

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

Diversification Opportunities for Information Services and Gartner

0.13

Correlation Coefficient

Information Services  Gartner

Average diversification

The 3 months correlation between Information and Gartner is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Group and Gartner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gartner and Information Services 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 Information Services Group 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 Information Services i.e., Information Services and Gartner go up and down completely randomly.

Pair Corralation between Information Services and Gartner

Considering the 90-day investment horizon Information Services Group is expected to under-perform the Gartner. In addition to that, Information Services is 1.44 times more volatile than Gartner. It trades about -0.04 of its total potential returns per unit of risk. Gartner is currently generating about 0.06 per unit of volatility. If you would invest  34,780  in Gartner on January 30, 2024 and sell it today you would earn a total of  10,098  from holding Gartner or generate 29.03% return on investment over 90 days.

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

Information Services Group  vs.  Gartner

Information Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Information Services Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 Information Services and Gartner

The main advantage of trading using opposite Information Services and Gartner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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 Information Services Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.