Correlation Between Gartner and Science Applications

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

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

Diversification Opportunities for Gartner and Science Applications

0.03

Correlation Coefficient

Gartner  Science Applications

Significant diversification

The 3 months correlation between Gartner and Science is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Gartner and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications 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 Science Applications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Applications has no effect on the direction of Gartner i.e., Gartner and Science Applications go up and down completely randomly.

Pair Corralation between Gartner and Science Applications

Allowing for the 90-day total investment horizon Gartner is expected to generate 0.65 times more return on investment than Science Applications. However, Gartner is 1.54 times less risky than Science Applications. It trades about -0.04 of its potential returns per unit of risk. Science Applications International is currently generating about -0.2 per unit of risk. If you would invest  51,793  in Gartner on November 28, 2024 and sell it today you would lose (1,486) from holding Gartner or give up 2.87% of portfolio value over 90 days.

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

Gartner  vs.  Science Applications Internati

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.

Science Applications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Science Applications International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Gartner and Science Applications

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

The idea behind Gartner and Science Applications International 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.