Correlation Between Agilent Technologies and AutoNation
Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and AutoNation 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 AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilent Technologies and AutoNation, you can compare the effects of market volatilities on Agilent Technologies and AutoNation 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 AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and AutoNation.
Diversification Opportunities for Agilent Technologies and AutoNation
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Agilent and AutoNation is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation 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 AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and AutoNation go up and down completely randomly.
Pair Corralation between Agilent Technologies and AutoNation
Assuming the 90 days horizon Agilent Technologies is expected to generate 1.0 times more return on investment than AutoNation. However, Agilent Technologies is 1.0 times more volatile than AutoNation. It trades about 0.47 of its potential returns per unit of risk. AutoNation is currently generating about 0.21 per unit of risk. If you would invest 12,905 in Agilent Technologies on October 30, 2024 and sell it today you would earn a total of 1,597 from holding Agilent Technologies or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Agilent Technologies vs. AutoNation
Performance |
| Timeline |
| Agilent Technologies |
| AutoNation |
Agilent Technologies and AutoNation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agilent Technologies and AutoNation
The main advantage of trading using opposite Agilent Technologies and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.| Agilent Technologies vs. SINGAPORE AIRLINES | Agilent Technologies vs. MPH Health Care | Agilent Technologies vs. EPSILON HEALTHCARE LTD | Agilent Technologies vs. AEGEAN AIRLINES |
| AutoNation vs. GWILLI FOOD | AutoNation vs. Gruppo Mutuionline SpA | AutoNation vs. PLANT VEDA FOODS | AutoNation vs. Lamar Advertising |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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