Correlation Between Waters and Agilent Technologies

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

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

Diversification Opportunities for Waters and Agilent Technologies

0.84

Correlation Coefficient

Waters  Agilent Technologies

Very poor diversification

The 3 months correlation between Waters and Agilent is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Waters and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Waters 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 Waters 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 Waters i.e., Waters and Agilent Technologies go up and down completely randomly.

Pair Corralation between Waters and Agilent Technologies

Considering the 90-day investment horizon Waters is expected to generate 1.14 times more return on investment than Agilent Technologies. However, Waters is 1.14 times more volatile than Agilent Technologies. It trades about -0.08 of its potential returns per unit of risk. Agilent Technologies is currently generating about -0.2 per unit of risk. If you would invest  41,119  in Waters on February 3, 2025 and sell it today you would lose (6,074) from holding Waters or give up 14.77% of portfolio value over 90 days.

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

Waters  vs.  Agilent Technologies

Waters

Risk-Adjusted Performance

Very Weak

Over the last 90 days Waters has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Agilent Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agilent Technologies 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 somewhat strong which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Waters and Agilent Technologies

The main advantage of trading using opposite Waters and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waters 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.

The idea behind Waters and Agilent Technologies 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.