Correlation Between River and Agilent Technologies

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

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

Diversification Opportunities for River and Agilent Technologies

-0.18

Correlation Coefficient

River  Agilent Technologies

Good diversification

The 3 months correlation between River and Agilent is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding River and Mercantile and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and River 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 River and Mercantile 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 River i.e., River and Agilent Technologies go up and down completely randomly.

Pair Corralation between River and Agilent Technologies

Assuming the 90 days trading horizon River and Mercantile is expected to generate 0.51 times more return on investment than Agilent Technologies. However, River and Mercantile is 1.96 times less risky than Agilent Technologies. It trades about 0.07 of its potential returns per unit of risk. Agilent Technologies is currently generating about -0.05 per unit of risk. If you would invest  17,150  in River and Mercantile on October 6, 2024 and sell it today you would earn a total of  600.00  from holding River and Mercantile or generate 3.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

River and Mercantile  vs.  Agilent Technologies

River and Mercantile

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in River and Mercantile are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, River is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Agilent Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agilent Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Agilent Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with River and Agilent Technologies

The main advantage of trading using opposite River and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if River 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 River and Mercantile 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.