Correlation Between Microsoft and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Agilent Technologies, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Agilent Technologies.
Diversification Opportunities for Microsoft and Agilent Technologies
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microsoft and Agilent is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Agilent Technologies go up and down completely randomly.
Pair Corralation between Microsoft and Agilent Technologies
Given the investment horizon of 90 days Microsoft is expected to generate 0.95 times more return on investment than Agilent Technologies. However, Microsoft is 1.06 times less risky than Agilent Technologies. It trades about 0.06 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.02 per unit of risk. If you would invest 27,259 in Microsoft on January 19, 2024 and sell it today you would earn a total of 13,925 from holding Microsoft or generate 51.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Agilent Technologies
Performance |
| Timeline |
| Microsoft |
| Agilent Technologies |
Microsoft and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Agilent Technologies
The main advantage of trading using opposite Microsoft and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Agilent Technologies vs. Danaher | Agilent Technologies vs. IDEXX Laboratories | Agilent Technologies vs. Guardant Health | Agilent Technologies vs. Charles River Laboratories |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |