Correlation Between Agilent Technologies and Laboratory

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

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

Diversification Opportunities for Agilent Technologies and Laboratory

0.09

Correlation Coefficient

Agilent Technologies  Laboratory

Significant diversification

The 3 months correlation between Agilent and Laboratory is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Laboratory of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laboratory 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 Laboratory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laboratory has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Laboratory go up and down completely randomly.

Pair Corralation between Agilent Technologies and Laboratory

Taking into account the 90-day investment horizon Agilent Technologies is expected to under-perform the Laboratory. In addition to that, Agilent Technologies is 1.51 times more volatile than Laboratory of. It trades about -0.13 of its total potential returns per unit of risk. Laboratory of is currently generating about 0.02 per unit of volatility. If you would invest  22,820  in Laboratory of on December 28, 2024 and sell it today you would earn a total of  182.00  from holding Laboratory of or generate 0.8% return on investment over 90 days.

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

Agilent Technologies  vs.  Laboratory of

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Laboratory

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratory of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Laboratory is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Agilent Technologies and Laboratory

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

The idea behind Agilent Technologies and Laboratory 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..