Correlation Between Agilent Technologies and Twist Bioscience

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

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

Diversification Opportunities for Agilent Technologies and Twist Bioscience

0.39

Correlation Coefficient

Agilent Technologies  Twist Bioscience

Weak diversification

The 3 months correlation between Agilent and Twist is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Twist Bioscience Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twist Bioscience 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 Twist Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twist Bioscience Corp has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Twist Bioscience go up and down completely randomly.

Pair Corralation between Agilent Technologies and Twist Bioscience

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 4.82 times less return on investment than Twist Bioscience. But when comparing it to its historical volatility, Agilent Technologies is 2.73 times less risky than Twist Bioscience. It trades about 0.05 of its potential returns per unit of risk. Twist Bioscience Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,640  in Twist Bioscience Corp on September 25, 2024 and sell it today you would earn a total of  250.00  from holding Twist Bioscience Corp or generate 5.39% return on investment over 90 days.

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

Agilent Technologies  vs.  Twist Bioscience Corp

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. Despite somewhat strong basic indicators, Agilent Technologies is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Twist Bioscience Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Twist Bioscience Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Twist Bioscience may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Agilent Technologies and Twist Bioscience

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

The idea behind Agilent Technologies and Twist Bioscience 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.