Correlation Between Gartner and Maximus

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

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

Diversification Opportunities for Gartner and Maximus

0.18

Correlation Coefficient

Gartner  Maximus

Average diversification

The 3 months correlation between Gartner and Maximus is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Gartner and Maximus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maximus 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 Maximus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maximus has no effect on the direction of Gartner i.e., Gartner and Maximus go up and down completely randomly.

Pair Corralation between Gartner and Maximus

Allowing for the 90-day total investment horizon Gartner is expected to generate 0.63 times more return on investment than Maximus. However, Gartner is 1.59 times less risky than Maximus. It trades about -0.35 of its potential returns per unit of risk. Maximus is currently generating about -0.34 per unit of risk. If you would invest  54,838  in Gartner on December 1, 2024 and sell it today you would lose (5,006) from holding Gartner or give up 9.13% of portfolio value over 90 days.

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

Gartner  vs.  Maximus

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 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.

Maximus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maximus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary 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 Gartner and Maximus

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

The idea behind Gartner and Maximus 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.