Correlation Between Laboratory and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both Laboratory and Agilent 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 Laboratory and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laboratory of and Agilent Technologies, you can compare the effects of market volatilities on Laboratory and Agilent 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 Laboratory with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laboratory and Agilent Technologies.
Diversification Opportunities for Laboratory and Agilent Technologies
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Laboratory and Agilent is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Laboratory 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 Laboratory of are associated (or correlated) with Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Laboratory i.e., Laboratory and Agilent Technologies go up and down completely randomly.
Pair Corralation between Laboratory and Agilent Technologies
Allowing for the 90-day total investment horizon Laboratory of is expected to generate 0.57 times more return on investment than Agilent Technologies. However, Laboratory of is 1.77 times less risky than Agilent Technologies. It trades about -0.29 of its potential returns per unit of risk. Agilent Technologies is currently generating about -0.27 per unit of risk. If you would invest 21,375 in Laboratory of on January 24, 2024 and sell it today you would lose (1,068) from holding Laboratory of or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Laboratory of vs. Agilent Technologies
Performance |
| Timeline |
| Laboratory |
| Agilent Technologies |
Laboratory and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laboratory and Agilent Technologies
The main advantage of trading using opposite Laboratory and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laboratory position performs unexpectedly, Agilent 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 Agilent Technologies will offset losses from the drop in Agilent Technologies' long position.| Laboratory vs. Quest Diagnostics Incorporated | Laboratory vs. Waters | Laboratory vs. Universal Health Services | Laboratory vs. Humana Inc |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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