Correlation Between Capgemini and Gartner

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

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

Diversification Opportunities for Capgemini and Gartner

0.72

Correlation Coefficient

Capgemini  Gartner

Poor diversification

The 3 months correlation between Capgemini and Gartner is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE ADR and Gartner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gartner and Capgemini 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 Capgemini SE ADR 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 Capgemini i.e., Capgemini and Gartner go up and down completely randomly.

Pair Corralation between Capgemini and Gartner

Assuming the 90 days horizon Capgemini SE ADR is expected to generate 1.44 times more return on investment than Gartner. However, Capgemini is 1.44 times more volatile than Gartner. It trades about -0.01 of its potential returns per unit of risk. Gartner is currently generating about -0.15 per unit of risk. If you would invest  3,227  in Capgemini SE ADR on December 30, 2024 and sell it today you would lose (86.00) from holding Capgemini SE ADR or give up 2.67% of portfolio value over 90 days.

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

Capgemini SE ADR  vs.  Gartner

Capgemini SE ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capgemini SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Capgemini is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Gartner

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Capgemini and Gartner

The main advantage of trading using opposite Capgemini and Gartner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capgemini 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 Capgemini SE ADR 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.