Correlation Between Agilent Technologies and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and Meta Platforms 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 Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilent Technologies and Meta Platforms, you can compare the effects of market volatilities on Agilent Technologies and Meta Platforms 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 Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and Meta Platforms.
Diversification Opportunities for Agilent Technologies and Meta Platforms
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Agilent and Meta is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms 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 Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Meta Platforms go up and down completely randomly.
Pair Corralation between Agilent Technologies and Meta Platforms
Taking into account the 90-day investment horizon Agilent Technologies is expected to under-perform the Meta Platforms. But the stock apears to be less risky and, when comparing its historical volatility, Agilent Technologies is 1.47 times less risky than Meta Platforms. The stock trades about -0.01 of its potential returns per unit of risk. The Meta Platforms is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 12,206 in Meta Platforms on August 26, 2024 and sell it today you would earn a total of 43,708 from holding Meta Platforms or generate 358.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agilent Technologies vs. Meta Platforms
Performance |
| Timeline |
| Agilent Technologies |
| Meta Platforms |
Agilent Technologies and Meta Platforms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agilent Technologies and Meta Platforms
The main advantage of trading using opposite Agilent Technologies and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, Meta Platforms 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 Meta Platforms will offset losses from the drop in Meta Platforms' long position.| Agilent Technologies vs. Danaher | Agilent Technologies vs. Illumina | Agilent Technologies vs. IDEXX Laboratories | Agilent Technologies vs. Waters |
| Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc | Meta Platforms vs. Baidu Inc |
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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