Correlation Between Agilent Technologies and Fortune Brands

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

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

Diversification Opportunities for Agilent Technologies and Fortune Brands

-0.33

Correlation Coefficient

Agilent Technologies  Fortune Brands

Very good diversification

The 3 months correlation between Agilent and Fortune is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Fortune Brands Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Home 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 Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Home has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Fortune Brands go up and down completely randomly.

Pair Corralation between Agilent Technologies and Fortune Brands

Assuming the 90 days horizon Agilent Technologies is expected to generate 0.9 times more return on investment than Fortune Brands. However, Agilent Technologies is 1.11 times less risky than Fortune Brands. It trades about 0.04 of its potential returns per unit of risk. Fortune Brands Home is currently generating about 0.01 per unit of risk. If you would invest  12,472  in Agilent Technologies on October 26, 2024 and sell it today you would earn a total of  2,164  from holding Agilent Technologies or generate 17.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

Agilent Technologies  vs.  Fortune Brands Home

Agilent Technologies

Risk-Adjusted Performance

14 of 100

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 nearly fragile basic indicators, Agilent Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Fortune Brands Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortune Brands Home has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Agilent Technologies and Fortune Brands

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

The idea behind Agilent Technologies and Fortune Brands Home 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.