Correlation Between Urban Outfitters and Agilent Technologies

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

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

Diversification Opportunities for Urban Outfitters and Agilent Technologies

0.46

Correlation Coefficient

Urban Outfitters  Agilent Technologies

Very weak diversification

The 3 months correlation between Urban and Agilent is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Urban Outfitters and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Urban Outfitters 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 Urban Outfitters 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 Urban Outfitters i.e., Urban Outfitters and Agilent Technologies go up and down completely randomly.

Pair Corralation between Urban Outfitters and Agilent Technologies

Assuming the 90 days horizon Urban Outfitters is expected to generate 1.44 times more return on investment than Agilent Technologies. However, Urban Outfitters is 1.44 times more volatile than Agilent Technologies. It trades about 0.36 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.02 per unit of risk. If you would invest  3,280  in Urban Outfitters on October 11, 2024 and sell it today you would earn a total of  2,320  from holding Urban Outfitters or generate 70.73% return on investment over 90 days.

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

Urban Outfitters  vs.  Agilent Technologies

Urban Outfitters

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Outfitters are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Urban Outfitters reported solid returns over the last few months and may actually be approaching a breakup point.

Agilent Technologies

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Urban Outfitters and Agilent Technologies

The main advantage of trading using opposite Urban Outfitters and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urban Outfitters 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 Urban Outfitters 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.