Correlation Between Apartment Investment and Agilent Technologies

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

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

Diversification Opportunities for Apartment Investment and Agilent Technologies

-0.43

Correlation Coefficient

Apartment Investment  Agilent Technologies

Very good diversification

The 3 months correlation between Apartment and Agilent is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Apartment Investment and and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Apartment Investment 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 Apartment Investment and are associated (or correlated) with Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Apartment Investment i.e., Apartment Investment and Agilent Technologies go up and down completely randomly.

Pair Corralation between Apartment Investment and Agilent Technologies

Assuming the 90 days trading horizon Apartment Investment is expected to generate 1.45 times less return on investment than Agilent Technologies. In addition to that, Apartment Investment is 1.07 times more volatile than Agilent Technologies. It trades about 0.06 of its total potential returns per unit of risk. Agilent Technologies is currently generating about 0.09 per unit of volatility. If you would invest  37,126  in Agilent Technologies on September 5, 2024 and sell it today you would earn a total of  3,161  from holding Agilent Technologies or generate 8.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Apartment Investment and  vs.  Agilent Technologies

Apartment Investment and

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apartment Investment and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Apartment Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Agilent Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 7 (%) 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 January 2025.

Pair Trading with Apartment Investment and Agilent Technologies

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

The idea behind Apartment Investment and and Agilent Technologies 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.