Correlation Between MAHLE Metal and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both MAHLE Metal 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 MAHLE Metal and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAHLE Metal Leve and Agilent Technologies, you can compare the effects of market volatilities on MAHLE Metal 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 MAHLE Metal with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAHLE Metal and Agilent Technologies.
Diversification Opportunities for MAHLE Metal and Agilent Technologies
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between MAHLE and Agilent is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and MAHLE Metal 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 MAHLE Metal Leve 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 MAHLE Metal i.e., MAHLE Metal and Agilent Technologies go up and down completely randomly.
Pair Corralation between MAHLE Metal and Agilent Technologies
Assuming the 90 days trading horizon MAHLE Metal Leve is expected to generate 1.64 times more return on investment than Agilent Technologies. However, MAHLE Metal is 1.64 times more volatile than Agilent Technologies. It trades about 0.25 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.3 per unit of risk. If you would invest 2,618 in MAHLE Metal Leve on November 4, 2024 and sell it today you would earn a total of 217.00 from holding MAHLE Metal Leve or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAHLE Metal Leve vs. Agilent Technologies
Performance |
| Timeline |
| MAHLE Metal Leve |
| Agilent Technologies |
MAHLE Metal and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAHLE Metal and Agilent Technologies
The main advantage of trading using opposite MAHLE Metal and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAHLE Metal 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 MAHLE Metal Leve 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. The Home Depot | Agilent Technologies vs. Verizon Communications | Agilent Technologies vs. Liberty Broadband | Agilent Technologies vs. Academy Sports and |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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