Correlation Between Agilent Technologies and Dyadic International

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

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

Diversification Opportunities for Agilent Technologies and Dyadic International

-0.66

Correlation Coefficient

Agilent Technologies  Dyadic International

Excellent diversification

The 3 months correlation between Agilent and Dyadic is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Dyadic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dyadic International 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 Dyadic International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dyadic International has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Dyadic International go up and down completely randomly.

Pair Corralation between Agilent Technologies and Dyadic International

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 0.36 times more return on investment than Dyadic International. However, Agilent Technologies is 2.75 times less risky than Dyadic International. It trades about -0.01 of its potential returns per unit of risk. Dyadic International is currently generating about -0.01 per unit of risk. If you would invest  13,957  in Agilent Technologies on July 23, 2024 and sell it today you would lose (74.00) from holding Agilent Technologies or give up 0.53% of portfolio value over 90 days.

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

Agilent Technologies  vs.  Dyadic International

Agilent Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Dyadic International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dyadic International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in November 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Agilent Technologies and Dyadic International

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

The idea behind Agilent Technologies and Dyadic International 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.