Correlation Between Agilent Technologies and Sarepta Therapeutics

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

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

Diversification Opportunities for Agilent Technologies and Sarepta Therapeutics

-0.67

Correlation Coefficient

Agilent Technologies  Sarepta Therapeutics

Excellent diversification

The 3 months correlation between Agilent and Sarepta is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Sarepta Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarepta Therapeutics 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 Sarepta Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarepta Therapeutics has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Sarepta Therapeutics go up and down completely randomly.

Pair Corralation between Agilent Technologies and Sarepta Therapeutics

Assuming the 90 days trading horizon Agilent Technologies is expected to generate 0.3 times more return on investment than Sarepta Therapeutics. However, Agilent Technologies is 3.38 times less risky than Sarepta Therapeutics. It trades about 0.18 of its potential returns per unit of risk. Sarepta Therapeutics is currently generating about -0.17 per unit of risk. If you would invest  41,783  in Agilent Technologies on December 2, 2024 and sell it today you would earn a total of  2,483  from holding Agilent Technologies or generate 5.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	79.03%
Values	Daily Returns

Agilent Technologies  vs.  Sarepta Therapeutics

Agilent Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sarepta Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sarepta Therapeutics 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.

Pair Trading with Agilent Technologies and Sarepta Therapeutics

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

The idea behind Agilent Technologies and Sarepta Therapeutics 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.