Correlation Between Verastem and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both Verastem 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 Verastem and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verastem and Agilent Technologies, you can compare the effects of market volatilities on Verastem 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 Verastem with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verastem and Agilent Technologies.
Diversification Opportunities for Verastem and Agilent Technologies
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Verastem and Agilent is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Verastem and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Verastem 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 Verastem 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 Verastem i.e., Verastem and Agilent Technologies go up and down completely randomly.
Pair Corralation between Verastem and Agilent Technologies
Given the investment horizon of 90 days Verastem is expected to generate 2.7 times more return on investment than Agilent Technologies. However, Verastem is 2.7 times more volatile than Agilent Technologies. It trades about 0.23 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.08 per unit of risk. If you would invest 318.00 in Verastem on August 26, 2024 and sell it today you would earn a total of 82.00 from holding Verastem or generate 25.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verastem vs. Agilent Technologies
Performance |
| Timeline |
| Verastem |
| Agilent Technologies |
Verastem and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verastem and Agilent Technologies
The main advantage of trading using opposite Verastem and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verastem 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 Verastem 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. Fonar | Agilent Technologies vs. Burning Rock Biotech | Agilent Technologies vs. Sera Prognostics | Agilent Technologies vs. Exagen Inc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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