Correlation Between Ford and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Agilent Technologies, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Agilent Technologies.
Diversification Opportunities for Ford and Agilent Technologies
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Agilent is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Ford 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 Ford Motor 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 Ford i.e., Ford and Agilent Technologies go up and down completely randomly.
Pair Corralation between Ford and Agilent Technologies
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.38 times more return on investment than Agilent Technologies. However, Ford is 1.38 times more volatile than Agilent Technologies. It trades about 0.01 of its potential returns per unit of risk. Agilent Technologies is currently generating about -0.01 per unit of risk. If you would invest 1,132 in Ford Motor on August 26, 2024 and sell it today you would lose (14.00) from holding Ford Motor or give up 1.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Agilent Technologies
Performance |
| Timeline |
| Ford Motor |
| Agilent Technologies |
Ford and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Agilent Technologies
The main advantage of trading using opposite Ford and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and Agilent Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Agilent Technologies vs. Danaher | Agilent Technologies vs. Illumina | Agilent Technologies vs. IDEXX Laboratories | Agilent Technologies vs. Waters |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |