Correlation Between BCE and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both BCE 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 BCE and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc and Agilent Technologies, you can compare the effects of market volatilities on BCE 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 BCE with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and Agilent Technologies.
Diversification Opportunities for BCE and Agilent Technologies
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BCE and Agilent is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and BCE 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 BCE Inc 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 BCE i.e., BCE and Agilent Technologies go up and down completely randomly.
Pair Corralation between BCE and Agilent Technologies
Assuming the 90 days trading horizon BCE Inc is expected to generate 0.6 times more return on investment than Agilent Technologies. However, BCE Inc is 1.67 times less risky than Agilent Technologies. It trades about -0.1 of its potential returns per unit of risk. Agilent Technologies is currently generating about -0.27 per unit of risk. If you would invest 4,595 in BCE Inc on January 24, 2024 and sell it today you would lose (89.00) from holding BCE Inc or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
BCE Inc vs. Agilent Technologies
Performance |
| Timeline |
| BCE Inc |
| Agilent Technologies |
BCE and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and Agilent Technologies
The main advantage of trading using opposite BCE and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE 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 BCE Inc 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. Nuvation Bio | Agilent Technologies vs. Lyell Immunopharma | Agilent Technologies vs. Century Therapeutics | Agilent Technologies vs. Generation BioCo |
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 Stocks Directory module to find actively traded stocks across global markets.
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