Correlation Between Agilent Technologies and Aura Biosciences

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

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

Diversification Opportunities for Agilent Technologies and Aura Biosciences

0.07

Correlation Coefficient

Agilent Technologies  Aura Biosciences

Significant diversification

The 3 months correlation between Agilent and Aura is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Aura Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Biosciences 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 Aura Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Biosciences has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Aura Biosciences go up and down completely randomly.

Pair Corralation between Agilent Technologies and Aura Biosciences

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 0.61 times more return on investment than Aura Biosciences. However, Agilent Technologies is 1.64 times less risky than Aura Biosciences. It trades about -0.09 of its potential returns per unit of risk. Aura Biosciences is currently generating about -0.12 per unit of risk. If you would invest  13,932  in Agilent Technologies on December 2, 2024 and sell it today you would lose (1,140) from holding Agilent Technologies or give up 8.18% of portfolio value over 90 days.

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

Agilent Technologies  vs.  Aura Biosciences

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Aura Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aura Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Agilent Technologies and Aura Biosciences

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

The idea behind Agilent Technologies and Aura Biosciences 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.