Correlation Between Agilent Technologies and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and Prudential Financial 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 Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilent Technologies and Prudential Financial, you can compare the effects of market volatilities on Agilent Technologies and Prudential Financial 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 Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and Prudential Financial.
Diversification Opportunities for Agilent Technologies and Prudential Financial
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Agilent and Prudential is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Prudential Financial go up and down completely randomly.
Pair Corralation between Agilent Technologies and Prudential Financial
Assuming the 90 days trading horizon Agilent Technologies is expected to under-perform the Prudential Financial. But the stock apears to be less risky and, when comparing its historical volatility, Agilent Technologies is 1.2 times less risky than Prudential Financial. The stock trades about -0.05 of its potential returns per unit of risk. The Prudential Financial is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 32,340 in Prudential Financial on August 24, 2024 and sell it today you would earn a total of 3,789 from holding Prudential Financial or generate 11.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.0% |
| Values | Daily Returns |
Agilent Technologies vs. Prudential Financial
Performance |
| Timeline |
| Agilent Technologies |
| Prudential Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Agilent Technologies and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agilent Technologies and Prudential Financial
The main advantage of trading using opposite Agilent Technologies and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, Prudential Financial 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.| Agilent Technologies vs. Ameriprise Financial | Agilent Technologies vs. Mitsubishi UFJ Financial | Agilent Technologies vs. Metalrgica Riosulense SA | Agilent Technologies vs. Tyson Foods |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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