Correlation Between Agilent Technologies and Edwards Lifesciences

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

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

Diversification Opportunities for Agilent Technologies and Edwards Lifesciences

-0.51

Correlation Coefficient

Agilent Technologies  Edwards Lifesciences

Excellent diversification

The 3 months correlation between Agilent and Edwards is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Edwards Lifesciences Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences Corp 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 Edwards Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edwards Lifesciences Corp has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Edwards Lifesciences go up and down completely randomly.

Pair Corralation between Agilent Technologies and Edwards Lifesciences

Taking into account the 90-day investment horizon Agilent Technologies is expected to under-perform the Edwards Lifesciences. But the stock apears to be less risky and, when comparing its historical volatility, Agilent Technologies is 1.26 times less risky than Edwards Lifesciences. The stock trades about -0.54 of its potential returns per unit of risk. The Edwards Lifesciences Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  7,322  in Edwards Lifesciences Corp on December 1, 2024 and sell it today you would lose (160.00) from holding Edwards Lifesciences Corp or give up 2.19% of portfolio value over 90 days.

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

Agilent Technologies  vs.  Edwards Lifesciences Corp

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 unfluctuating 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.

Edwards Lifesciences Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Edwards Lifesciences is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Agilent Technologies and Edwards Lifesciences

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

The idea behind Agilent Technologies and Edwards Lifesciences Corp 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 Stocks Directory module to find actively traded stocks across global markets.