Correlation Between ICON PLC and Agilent Technologies

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

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

Diversification Opportunities for ICON PLC and Agilent Technologies

0.52

Correlation Coefficient

ICON PLC  Agilent Technologies

Very weak diversification

The 3 months correlation between ICON and Agilent is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding ICON PLC and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and ICON PLC 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 ICON PLC are associated (or correlated) with Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of ICON PLC i.e., ICON PLC and Agilent Technologies go up and down completely randomly.

Pair Corralation between ICON PLC and Agilent Technologies

Given the investment horizon of 90 days ICON PLC is expected to under-perform the Agilent Technologies. In addition to that, ICON PLC is 1.27 times more volatile than Agilent Technologies. It trades about -0.13 of its total potential returns per unit of risk. Agilent Technologies is currently generating about -0.11 per unit of volatility. If you would invest  13,529  in Agilent Technologies on December 27, 2024 and sell it today you would lose (1,539) from holding Agilent Technologies or give up 11.38% of portfolio value over 90 days.

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

ICON PLC  vs.  Agilent Technologies

ICON PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days ICON PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with ICON PLC and Agilent Technologies

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

The idea behind ICON PLC and Agilent Technologies 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.