Correlation Between Trade Desk and Agilent Technologies

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

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

Diversification Opportunities for Trade Desk and Agilent Technologies

-0.61

Correlation Coefficient

Trade Desk  Agilent Technologies

Excellent diversification

The 3 months correlation between Trade and Agilent is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding The Trade Desk and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Trade Desk 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 The Trade Desk 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 Trade Desk i.e., Trade Desk and Agilent Technologies go up and down completely randomly.

Pair Corralation between Trade Desk and Agilent Technologies

Assuming the 90 days trading horizon The Trade Desk is expected to under-perform the Agilent Technologies. In addition to that, Trade Desk is 2.35 times more volatile than Agilent Technologies. It trades about -0.04 of its total potential returns per unit of risk. Agilent Technologies is currently generating about 0.14 per unit of volatility. If you would invest  38,676  in Agilent Technologies on December 4, 2024 and sell it today you would earn a total of  5,590  from holding Agilent Technologies or generate 14.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	46.72%
Values	Daily Returns

The Trade Desk  vs.  Agilent Technologies

Trade Desk

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Trade Desk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Agilent Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Trade Desk and Agilent Technologies

The main advantage of trading using opposite Trade Desk and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Desk 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 The Trade Desk 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.