Correlation Between Agilent Technologies and Catalent
Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and Catalent 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 Agilent Technologies and Catalent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilent Technologies and Catalent, you can compare the effects of market volatilities on Agilent Technologies and Catalent 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 Agilent Technologies with a short position of Catalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and Catalent.
Diversification Opportunities for Agilent Technologies and Catalent
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Agilent and Catalent is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent and Agilent Technologies 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 Agilent Technologies are associated (or correlated) with Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Catalent go up and down completely randomly.
Pair Corralation between Agilent Technologies and Catalent
Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 2.26 times more return on investment than Catalent. However, Agilent Technologies is 2.26 times more volatile than Catalent. It trades about 0.12 of its potential returns per unit of risk. Catalent is currently generating about 0.19 per unit of risk. If you would invest 13,123 in Agilent Technologies on August 30, 2024 and sell it today you would earn a total of 691.00 from holding Agilent Technologies or generate 5.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Agilent Technologies vs. Catalent
Performance |
| Timeline |
| Agilent Technologies |
| Catalent |
Agilent Technologies and Catalent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agilent Technologies and Catalent
The main advantage of trading using opposite Agilent Technologies and Catalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, Catalent 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 Catalent will offset losses from the drop in Catalent's long position.| Agilent Technologies vs. Danaher | Agilent Technologies vs. Illumina | Agilent Technologies vs. IDEXX Laboratories | Agilent Technologies vs. Waters |
| Catalent vs. Emergent Biosolutions | Catalent vs. Bausch Health Companies | Catalent vs. Neurocrine Biosciences | Catalent vs. Teva Pharma Industries |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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