Correlation Between Agilent Technologies and TRAVEL +

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

By analyzing existing cross correlation between Agilent Technologies and TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on Agilent Technologies and TRAVEL + 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 TRAVEL +. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and TRAVEL +.

Diversification Opportunities for Agilent Technologies and TRAVEL +

0.38

Correlation Coefficient

Agilent Technologies  TRAVEL +

Weak diversification

The 3 months correlation between Agilent and TRAVEL is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL 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 TRAVEL +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and TRAVEL + go up and down completely randomly.

Pair Corralation between Agilent Technologies and TRAVEL +

Assuming the 90 days horizon Agilent Technologies is expected to generate 1.1 times more return on investment than TRAVEL +. However, Agilent Technologies is 1.1 times more volatile than TRAVEL LEISURE DL 01. It trades about 0.55 of its potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about 0.23 per unit of risk. If you would invest  12,881  in Agilent Technologies on October 23, 2024 and sell it today you would earn a total of  1,389  from holding Agilent Technologies or generate 10.78% return on investment over 90 days.

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

Agilent Technologies  vs.  TRAVEL LEISURE DL 01

Agilent Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 12 (%) 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.

TRAVEL LEISURE DL

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agilent Technologies and TRAVEL +

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

The idea behind Agilent Technologies and TRAVEL LEISURE DL 01 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.