Correlation Between Agilent Technologies and Fras Le
Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and Fras Le 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 Fras Le into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilent Technologies and Fras le SA, you can compare the effects of market volatilities on Agilent Technologies and Fras Le 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 Fras Le. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and Fras Le.
Diversification Opportunities for Agilent Technologies and Fras Le
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Agilent and Fras is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Fras le SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fras le SA 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 Fras Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fras le SA has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Fras Le go up and down completely randomly.
Pair Corralation between Agilent Technologies and Fras Le
Assuming the 90 days trading horizon Agilent Technologies is expected to generate 1.39 times more return on investment than Fras Le. However, Agilent Technologies is 1.39 times more volatile than Fras le SA. It trades about -0.05 of its potential returns per unit of risk. Fras le SA is currently generating about -0.24 per unit of risk. If you would invest 41,360 in Agilent Technologies on August 26, 2024 and sell it today you would lose (1,073) from holding Agilent Technologies or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agilent Technologies vs. Fras le SA
Performance |
| Timeline |
| Agilent Technologies |
| Fras le SA |
Agilent Technologies and Fras Le Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agilent Technologies and Fras Le
The main advantage of trading using opposite Agilent Technologies and Fras Le positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, Fras Le 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 Fras Le will offset losses from the drop in Fras Le's long position.| Agilent Technologies vs. Fras le SA | Agilent Technologies vs. Western Digital | Agilent Technologies vs. Clave Indices De | Agilent Technologies vs. BTG Pactual Logstica |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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