Correlation Between Agilent Technologies and Vale SA

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

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

Diversification Opportunities for Agilent Technologies and Vale SA

-0.33

Correlation Coefficient

Agilent Technologies  Vale SA

Very good diversification

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

Pair Corralation between Agilent Technologies and Vale SA

Assuming the 90 days horizon Agilent Technologies is expected to under-perform the Vale SA. In addition to that, Agilent Technologies is 1.03 times more volatile than Vale SA. It trades about -0.13 of its total potential returns per unit of risk. Vale SA is currently generating about 0.13 per unit of volatility. If you would invest  811.00  in Vale SA on December 20, 2024 and sell it today you would earn a total of  99.00  from holding Vale SA or generate 12.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Agilent Technologies  vs.  Vale SA

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.

Vale SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vale SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain essential indicators, Vale SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agilent Technologies and Vale SA

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

The idea behind Agilent Technologies and Vale SA 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.