Correlation Between Agilent Technologies and SPECTRAL MEDICAL

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

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

Diversification Opportunities for Agilent Technologies and SPECTRAL MEDICAL

-0.61

Correlation Coefficient

Agilent Technologies  SPECTRAL MEDICAL

Excellent diversification

The 3 months correlation between Agilent and SPECTRAL is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and SPECTRAL MEDICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPECTRAL MEDICAL 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 SPECTRAL MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPECTRAL MEDICAL has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and SPECTRAL MEDICAL go up and down completely randomly.

Pair Corralation between Agilent Technologies and SPECTRAL MEDICAL

Assuming the 90 days horizon Agilent Technologies is expected to under-perform the SPECTRAL MEDICAL. But the stock apears to be less risky and, when comparing its historical volatility, Agilent Technologies is 2.81 times less risky than SPECTRAL MEDICAL. The stock trades about -0.12 of its potential returns per unit of risk. The SPECTRAL MEDICAL is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  30.00  in SPECTRAL MEDICAL on December 22, 2024 and sell it today you would earn a total of  11.00  from holding SPECTRAL MEDICAL or generate 36.67% return on investment over 90 days.

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

Agilent Technologies  vs.  SPECTRAL MEDICAL

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 uncertain 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.

SPECTRAL MEDICAL

Risk-Adjusted Performance

Good

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

Pair Trading with Agilent Technologies and SPECTRAL MEDICAL

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

The idea behind Agilent Technologies and SPECTRAL MEDICAL 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.