Correlation Between Agilent Technologies and State Bank

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

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

Diversification Opportunities for Agilent Technologies and State Bank

0.29

Correlation Coefficient

Agilent Technologies  State Bank

Modest diversification

The 3 months correlation between Agilent and State is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank 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 State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and State Bank go up and down completely randomly.

Pair Corralation between Agilent Technologies and State Bank

Assuming the 90 days trading horizon Agilent Technologies is expected to under-perform the State Bank. But the stock apears to be less risky and, when comparing its historical volatility, Agilent Technologies is 1.0 times less risky than State Bank. The stock trades about -0.01 of its potential returns per unit of risk. The State Bank of is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6,979  in State Bank of on October 9, 2024 and sell it today you would earn a total of  2,101  from holding State Bank of or generate 30.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.4%
Values	Daily Returns

Agilent Technologies  vs.  State Bank of

Agilent Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agilent Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Agilent Technologies is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

State Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, State Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Agilent Technologies and State Bank

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

The idea behind Agilent Technologies and State Bank of 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.