Correlation Between Agilent Technologies and Yum Brands
Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and Yum Brands 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 Yum Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilent Technologies and Yum Brands, you can compare the effects of market volatilities on Agilent Technologies and Yum Brands 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 Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and Yum Brands.
Diversification Opportunities for Agilent Technologies and Yum Brands
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Agilent and Yum is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands 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 Yum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yum Brands has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Yum Brands go up and down completely randomly.
Pair Corralation between Agilent Technologies and Yum Brands
Assuming the 90 days horizon Agilent Technologies is expected to generate 1.55 times more return on investment than Yum Brands. However, Agilent Technologies is 1.55 times more volatile than Yum Brands. It trades about 0.01 of its potential returns per unit of risk. Yum Brands is currently generating about 0.02 per unit of risk. If you would invest 13,925 in Agilent Technologies on October 29, 2024 and sell it today you would earn a total of 577.00 from holding Agilent Technologies or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agilent Technologies vs. Yum Brands
Performance |
| Timeline |
| Agilent Technologies |
| Yum Brands |
Agilent Technologies and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agilent Technologies and Yum Brands
The main advantage of trading using opposite Agilent Technologies and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, Yum Brands 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 Yum Brands will offset losses from the drop in Yum Brands' long position.| Agilent Technologies vs. Pentair plc | Agilent Technologies vs. Westinghouse Air Brake | Agilent Technologies vs. FORWARD AIR P | Agilent Technologies vs. ULTRA CLEAN HLDGS |
| Yum Brands vs. McDonalds | Yum Brands vs. Starbucks | Yum Brands vs. Chipotle Mexican Grill | Yum Brands vs. Compass Group PLC |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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