Correlation Between SIEMENS HEALTH and Agilent Technologies

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

By analyzing existing cross correlation between SIEMENS HEALTH ADR050 and Agilent Technologies, you can compare the effects of market volatilities on SIEMENS HEALTH 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 SIEMENS HEALTH with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIEMENS HEALTH and Agilent Technologies.

Diversification Opportunities for SIEMENS HEALTH and Agilent Technologies

0.49

Correlation Coefficient

SIEMENS HEALTH  Agilent Technologies

Very weak diversification

The 3 months correlation between SIEMENS and Agilent is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding SIEMENS HEALTH ADR050 and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and SIEMENS HEALTH 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 SIEMENS HEALTH ADR050 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 SIEMENS HEALTH i.e., SIEMENS HEALTH and Agilent Technologies go up and down completely randomly.

Pair Corralation between SIEMENS HEALTH and Agilent Technologies

Assuming the 90 days trading horizon SIEMENS HEALTH is expected to generate 5.92 times less return on investment than Agilent Technologies. In addition to that, SIEMENS HEALTH is 1.13 times more volatile than Agilent Technologies. It trades about 0.02 of its total potential returns per unit of risk. Agilent Technologies is currently generating about 0.15 per unit of volatility. If you would invest  12,243  in Agilent Technologies on October 23, 2024 and sell it today you would earn a total of  2,027  from holding Agilent Technologies or generate 16.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

SIEMENS HEALTH ADR050  vs.  Agilent Technologies

SIEMENS HEALTH ADR050

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SIEMENS HEALTH ADR050 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, SIEMENS HEALTH is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with SIEMENS HEALTH and Agilent Technologies

The main advantage of trading using opposite SIEMENS HEALTH and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIEMENS HEALTH 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 SIEMENS HEALTH ADR050 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.