Correlation Between Agilent Technologies and CVS Health
Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and CVS Health 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 CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilent Technologies and CVS Health, you can compare the effects of market volatilities on Agilent Technologies and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and CVS Health.
Diversification Opportunities for Agilent Technologies and CVS Health
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Agilent and CVS is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and CVS Health go up and down completely randomly.
Pair Corralation between Agilent Technologies and CVS Health
Assuming the 90 days trading horizon Agilent Technologies is expected to generate 0.86 times more return on investment than CVS Health. However, Agilent Technologies is 1.16 times less risky than CVS Health. It trades about 0.08 of its potential returns per unit of risk. CVS Health is currently generating about 0.02 per unit of risk. If you would invest 29,323 in Agilent Technologies on September 12, 2024 and sell it today you would earn a total of 10,964 from holding Agilent Technologies or generate 37.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 69.77% |
| Values | Daily Returns |
Agilent Technologies vs. CVS Health
Performance |
| Timeline |
| Agilent Technologies |
| CVS Health |
Agilent Technologies and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agilent Technologies and CVS Health
The main advantage of trading using opposite Agilent Technologies and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.| Agilent Technologies vs. DexCom Inc | Agilent Technologies vs. Fundo Investimento Imobiliario | Agilent Technologies vs. LESTE FDO INV | Agilent Technologies vs. Fras le SA |
| CVS Health vs. Fundo Investimento Imobiliario | CVS Health vs. LESTE FDO INV | CVS Health vs. Fras le SA | CVS Health vs. Western Digital |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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