Correlation Between Agilent Technologies and American Airlines
Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and American Airlines 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 Agilent Technologies and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilent Technologies and American Airlines Group, you can compare the effects of market volatilities on Agilent Technologies and American Airlines 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 Agilent Technologies with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and American Airlines.
Diversification Opportunities for Agilent Technologies and American Airlines
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Agilent and American is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Agilent Technologies 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 Agilent Technologies are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and American Airlines go up and down completely randomly.
Pair Corralation between Agilent Technologies and American Airlines
Taking into account the 90-day investment horizon Agilent Technologies is expected to under-perform the American Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Agilent Technologies is 1.82 times less risky than American Airlines. The stock trades about -0.34 of its potential returns per unit of risk. The American Airlines Group is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,457 in American Airlines Group on January 20, 2024 and sell it today you would lose (55.00) from holding American Airlines Group or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agilent Technologies vs. American Airlines Group
Performance |
| Timeline |
| Agilent Technologies |
| American Airlines |
Agilent Technologies and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agilent Technologies and American Airlines
The main advantage of trading using opposite Agilent Technologies and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| Agilent Technologies vs. Oric PharmaceuticalsInc | Agilent Technologies vs. Anebulo Pharmaceuticals | Agilent Technologies vs. Cullinan Oncology LLC | Agilent Technologies vs. C4 TherapeuticsInc |
| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. Spirit Airlines |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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