Correlation Between Volkswagen and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both Volkswagen 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 Volkswagen and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Agilent Technologies, you can compare the effects of market volatilities on Volkswagen 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 Volkswagen with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Agilent Technologies.
Diversification Opportunities for Volkswagen and Agilent Technologies
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Volkswagen and Agilent is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Volkswagen 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 Volkswagen AG 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 Volkswagen i.e., Volkswagen and Agilent Technologies go up and down completely randomly.
Pair Corralation between Volkswagen and Agilent Technologies
Assuming the 90 days trading horizon Volkswagen AG is expected to generate 1.03 times more return on investment than Agilent Technologies. However, Volkswagen is 1.03 times more volatile than Agilent Technologies. It trades about -0.02 of its potential returns per unit of risk. Agilent Technologies is currently generating about -0.04 per unit of risk. If you would invest 9,655 in Volkswagen AG on October 14, 2024 and sell it today you would lose (315.00) from holding Volkswagen AG or give up 3.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Volkswagen AG vs. Agilent Technologies
Performance |
| Timeline |
| Volkswagen AG |
| Agilent Technologies |
Volkswagen and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Agilent Technologies
The main advantage of trading using opposite Volkswagen and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen 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.| Volkswagen vs. Iron Mountain | Volkswagen vs. Celebrus Technologies plc | Volkswagen vs. Aptitude Software Group | Volkswagen vs. Made Tech Group |
| Agilent Technologies vs. DXC Technology Co | Agilent Technologies vs. Take Two Interactive Software | Agilent Technologies vs. Molson Coors Beverage | Agilent Technologies vs. Sabien Technology Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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