Correlation Between CVS Health and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both CVS Health and Agilent Technologies 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 CVS Health and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Agilent Technologies, you can compare the effects of market volatilities on CVS Health and Agilent Technologies 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 CVS Health with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Agilent Technologies.
Diversification Opportunities for CVS Health and Agilent Technologies
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CVS and Agilent is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and CVS Health 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 CVS Health are associated (or correlated) with Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of CVS Health i.e., CVS Health and Agilent Technologies go up and down completely randomly.
Pair Corralation between CVS Health and Agilent Technologies
Assuming the 90 days trading horizon CVS Health is expected to generate 3.1 times less return on investment than Agilent Technologies. In addition to that, CVS Health is 1.16 times more volatile than Agilent Technologies. It trades about 0.02 of its total potential returns per unit of risk. Agilent Technologies is currently generating about 0.08 per unit of volatility. 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 |
CVS Health vs. Agilent Technologies
Performance |
| Timeline |
| CVS Health |
| Agilent Technologies |
CVS Health and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Agilent Technologies
The main advantage of trading using opposite CVS Health and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Agilent Technologies 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 Agilent Technologies will offset losses from the drop in Agilent Technologies' long position.| CVS Health vs. Fundo Investimento Imobiliario | CVS Health vs. LESTE FDO INV | CVS Health vs. Fras le SA | CVS Health vs. Western Digital |
| Agilent Technologies vs. DexCom Inc | Agilent Technologies vs. Fundo Investimento Imobiliario | Agilent Technologies vs. LESTE FDO INV | Agilent Technologies vs. Fras le SA |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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