Correlation Between Gartner and CSP

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

By analyzing existing cross correlation between Gartner and CSP Inc, you can compare the effects of market volatilities on Gartner and CSP 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 CSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gartner and CSP.

Diversification Opportunities for Gartner and CSP

0.87

Correlation Coefficient

Gartner  CSP

Very poor diversification

The 3 months correlation between Gartner and CSP is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Gartner and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc 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 CSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Inc has no effect on the direction of Gartner i.e., Gartner and CSP go up and down completely randomly.

Pair Corralation between Gartner and CSP

Allowing for the 90-day total investment horizon Gartner is expected to generate 0.46 times more return on investment than CSP. However, Gartner is 2.17 times less risky than CSP. It trades about -0.07 of its potential returns per unit of risk. CSP Inc is currently generating about -0.08 per unit of risk. If you would invest  45,630  in Gartner on March 21, 2024 and sell it today you would lose (1,000.00) from holding Gartner or give up 2.19% of portfolio value over 90 days.

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

Gartner  vs.  CSP Inc

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 uncertain 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.

CSP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSP Inc 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 basic indicators remain fairly strong which may send shares a bit higher in July 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Gartner and CSP

The main advantage of trading using opposite Gartner and CSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gartner position performs unexpectedly, CSP 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 CSP will offset losses from the drop in CSP's long position.

The idea behind Gartner and CSP Inc 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.