Correlation Between Agilent Technologies and Sensata Technologies
Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and Sensata Technologies 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 Sensata Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilent Technologies and Sensata Technologies Holding, you can compare the effects of market volatilities on Agilent Technologies and Sensata Technologies 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 Sensata Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and Sensata Technologies.
Diversification Opportunities for Agilent Technologies and Sensata Technologies
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Agilent and Sensata is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Sensata Technologies Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensata Technologies 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 Sensata Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensata Technologies has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Sensata Technologies go up and down completely randomly.
Pair Corralation between Agilent Technologies and Sensata Technologies
Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 0.92 times more return on investment than Sensata Technologies. However, Agilent Technologies is 1.09 times less risky than Sensata Technologies. It trades about 0.07 of its potential returns per unit of risk. Sensata Technologies Holding is currently generating about -0.03 per unit of risk. If you would invest 11,769 in Agilent Technologies on December 30, 2023 and sell it today you would earn a total of 2,782 from holding Agilent Technologies or generate 23.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Agilent Technologies vs. Sensata Technologies Holding
Performance |
Timeline |
Agilent Technologies |
Sensata Technologies |
Agilent Technologies and Sensata Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Agilent Technologies and Sensata Technologies
The main advantage of trading using opposite Agilent Technologies and Sensata Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, Sensata Technologies 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 Sensata Technologies will offset losses from the drop in Sensata Technologies' long position.Agilent Technologies vs. Guardant Health | Agilent Technologies vs. Laboratory | Agilent Technologies vs. MDxHealth SA ADR | Agilent Technologies vs. Medpace Holdings |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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