Correlation Between Gartner and Wipro Limited

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

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

Diversification Opportunities for Gartner and Wipro Limited

0.85

Correlation Coefficient

Gartner  Wipro Limited

Very poor diversification

The 3 months correlation between Gartner and Wipro is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Gartner and Wipro Limited ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wipro Limited ADR 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 Wipro Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wipro Limited ADR has no effect on the direction of Gartner i.e., Gartner and Wipro Limited go up and down completely randomly.

Pair Corralation between Gartner and Wipro Limited

Allowing for the 90-day total investment horizon Gartner is expected to under-perform the Wipro Limited. But the stock apears to be less risky and, when comparing its historical volatility, Gartner is 1.12 times less risky than Wipro Limited. The stock trades about -0.13 of its potential returns per unit of risk. The Wipro Limited ADR is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  348.00  in Wipro Limited ADR on December 28, 2024 and sell it today you would lose (35.00) from holding Wipro Limited ADR or give up 10.06% of portfolio value over 90 days.

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

Gartner  vs.  Wipro Limited ADR

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.

Wipro Limited ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wipro Limited ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward 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 Wipro Limited

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

The idea behind Gartner and Wipro Limited ADR 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.