Correlation Between Agilent Technologies and Northern Data

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

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

Diversification Opportunities for Agilent Technologies and Northern Data

0.67

Correlation Coefficient

Agilent Technologies  Northern Data

Poor diversification

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

Pair Corralation between Agilent Technologies and Northern Data

Assuming the 90 days horizon Agilent Technologies is expected to generate 0.42 times more return on investment than Northern Data. However, Agilent Technologies is 2.4 times less risky than Northern Data. It trades about -0.13 of its potential returns per unit of risk. Northern Data AG is currently generating about -0.19 per unit of risk. If you would invest  12,881  in Agilent Technologies on December 22, 2024 and sell it today you would lose (1,661) from holding Agilent Technologies or give up 12.89% of portfolio value over 90 days.

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

Agilent Technologies  vs.  Northern Data AG

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 fragile 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.

Northern Data AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northern Data AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Agilent Technologies and Northern Data

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

The idea behind Agilent Technologies and Northern Data AG 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..