Correlation Between Carsales and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both Carsales 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 Carsales and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and Agilent Technologies, you can compare the effects of market volatilities on Carsales 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 Carsales with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Agilent Technologies.
Diversification Opportunities for Carsales and Agilent Technologies
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Carsales and Agilent is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Carsales 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 CarsalesCom 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 Carsales i.e., Carsales and Agilent Technologies go up and down completely randomly.
Pair Corralation between Carsales and Agilent Technologies
Assuming the 90 days horizon CarsalesCom is expected to generate 0.85 times more return on investment than Agilent Technologies. However, CarsalesCom is 1.17 times less risky than Agilent Technologies. It trades about 0.08 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.01 per unit of risk. If you would invest 1,310 in CarsalesCom on October 16, 2024 and sell it today you would earn a total of 950.00 from holding CarsalesCom or generate 72.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom vs. Agilent Technologies
Performance |
| Timeline |
| CarsalesCom |
| Agilent Technologies |
Carsales and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and Agilent Technologies
The main advantage of trading using opposite Carsales and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales 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.| Carsales vs. MACOM Technology Solutions | Carsales vs. Micron Technology | Carsales vs. PPHE HOTEL GROUP | Carsales vs. Dalata Hotel Group |
| Agilent Technologies vs. INTER CARS SA | Agilent Technologies vs. United Natural Foods | Agilent Technologies vs. CN MODERN DAIRY | Agilent Technologies vs. CarsalesCom |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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