Correlation Between Agilent Technologies and Dermata Therapeutics

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

By analyzing existing cross correlation between Agilent Technologies and Dermata Therapeutics, you can compare the effects of market volatilities on Agilent Technologies and Dermata Therapeutics 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 Dermata Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and Dermata Therapeutics.

Diversification Opportunities for Agilent Technologies and Dermata Therapeutics

-0.43

Correlation Coefficient

Agilent Technologies  Dermata Therapeutics

Very good diversification

The 3 months correlation between Agilent and Dermata is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Dermata Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dermata Therapeutics 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 Dermata Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dermata Therapeutics has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Dermata Therapeutics go up and down completely randomly.

Pair Corralation between Agilent Technologies and Dermata Therapeutics

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 0.14 times more return on investment than Dermata Therapeutics. However, Agilent Technologies is 7.27 times less risky than Dermata Therapeutics. It trades about 0.12 of its potential returns per unit of risk. Dermata Therapeutics is currently generating about -0.11 per unit of risk. If you would invest  13,904  in Agilent Technologies on July 3, 2024 and sell it today you would earn a total of  944.00  from holding Agilent Technologies or generate 6.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Agilent Technologies  vs.  Dermata Therapeutics

Agilent Technologies

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Agilent Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Dermata Therapeutics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dermata Therapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Dermata Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agilent Technologies and Dermata Therapeutics

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

The idea behind Agilent Technologies and Dermata Therapeutics 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.