Correlation Between Gartner and Leidos Holdings

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

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

Diversification Opportunities for Gartner and Leidos Holdings

0.34

Correlation Coefficient

Gartner  Leidos Holdings

Weak diversification

The 3 months correlation between Gartner and Leidos is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Gartner and Leidos Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leidos Holdings 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 Leidos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leidos Holdings has no effect on the direction of Gartner i.e., Gartner and Leidos Holdings go up and down completely randomly.

Pair Corralation between Gartner and Leidos Holdings

Allowing for the 90-day total investment horizon Gartner is expected to under-perform the Leidos Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Gartner is 1.25 times less risky than Leidos Holdings. The stock trades about -0.15 of its potential returns per unit of risk. The Leidos Holdings is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  14,274  in Leidos Holdings on December 28, 2024 and sell it today you would lose (863.00) from holding Leidos Holdings or give up 6.05% of portfolio value over 90 days.

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

Gartner  vs.  Leidos Holdings

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.

Leidos Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Gartner and Leidos Holdings

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

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