Correlation Between Visa and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Agilent Technologies, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Agilent Technologies.
Diversification Opportunities for Visa and Agilent Technologies
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and Agilent is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Visa 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 Visa Class A 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 Visa i.e., Visa and Agilent Technologies go up and down completely randomly.
Pair Corralation between Visa and Agilent Technologies
Taking into account the 90-day investment horizon Visa is expected to generate 4.89 times less return on investment than Agilent Technologies. But when comparing it to its historical volatility, Visa Class A is 1.71 times less risky than Agilent Technologies. It trades about 0.14 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 13,544 in Agilent Technologies on October 25, 2024 and sell it today you would earn a total of 1,745 from holding Agilent Technologies or generate 12.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Visa Class A vs. Agilent Technologies
Performance |
| Timeline |
| Visa Class A |
| Agilent Technologies |
Visa and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Agilent Technologies
The main advantage of trading using opposite Visa and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Agilent Technologies vs. Grand Vision Media | Agilent Technologies vs. Norman Broadbent Plc | Agilent Technologies vs. Solstad Offshore ASA | Agilent Technologies vs. One Media iP |
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 CEOs Directory module to screen CEOs from public companies around the world.
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