Correlation Between Agilent Technologies and Air Lease

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

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

Diversification Opportunities for Agilent Technologies and Air Lease

0.39

Correlation Coefficient

Agilent Technologies  Air Lease

Weak diversification

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

Pair Corralation between Agilent Technologies and Air Lease

Assuming the 90 days horizon Agilent Technologies is expected to under-perform the Air Lease. But the stock apears to be less risky and, when comparing its historical volatility, Agilent Technologies is 1.14 times less risky than Air Lease. The stock trades about -0.13 of its potential returns per unit of risk. The Air Lease is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  4,618  in Air Lease on December 20, 2024 and sell it today you would lose (398.00) from holding Air Lease or give up 8.62% of portfolio value over 90 days.

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

Agilent Technologies  vs.  Air Lease

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 unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Air Lease

Risk-Adjusted Performance

Very Weak

Over the last 90 days Air Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Agilent Technologies and Air Lease

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

The idea behind Agilent Technologies and Air Lease 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.