Correlation Between Agilent Technologies and Ford
Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and Ford 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 Agilent Technologies and Ford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilent Technologies and Ford Motor, you can compare the effects of market volatilities on Agilent Technologies and Ford 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 Agilent Technologies with a short position of Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and Ford.
Diversification Opportunities for Agilent Technologies and Ford
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Agilent and Ford is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and Agilent Technologies 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 Agilent Technologies are associated (or correlated) with Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Ford go up and down completely randomly.
Pair Corralation between Agilent Technologies and Ford
Taking into account the 90-day investment horizon Agilent Technologies is expected to under-perform the Ford. But the stock apears to be less risky and, when comparing its historical volatility, Agilent Technologies is 1.49 times less risky than Ford. The stock trades about -0.14 of its potential returns per unit of risk. The Ford Motor is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,290 in Ford Motor on January 25, 2024 and sell it today you would earn a total of 5.00 from holding Ford Motor or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agilent Technologies vs. Ford Motor
Performance |
| Timeline |
| Agilent Technologies |
| Ford Motor |
Agilent Technologies and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agilent Technologies and Ford
The main advantage of trading using opposite Agilent Technologies and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.| Agilent Technologies vs. Fonar | Agilent Technologies vs. Burning Rock BiotechLtd | Agilent Technologies vs. Sera Prognostics | Agilent Technologies vs. Psychemedics |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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