Correlation Between Xeris Pharmaceuticals and Agilent Technologies

Can any of the company-specific risk be diversified away by investing in both Xeris Pharmaceuticals 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 Xeris Pharmaceuticals and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xeris Pharmaceuticals and Agilent Technologies, you can compare the effects of market volatilities on Xeris Pharmaceuticals 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 Xeris Pharmaceuticals with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xeris Pharmaceuticals and Agilent Technologies.

Diversification Opportunities for Xeris Pharmaceuticals and Agilent Technologies

0.02

Correlation Coefficient

Xeris Pharmaceuticals  Agilent Technologies

Significant diversification

The 3 months correlation between Xeris and Agilent is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Xeris Pharmaceuticals and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Xeris Pharmaceuticals 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 Xeris Pharmaceuticals 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 Xeris Pharmaceuticals i.e., Xeris Pharmaceuticals and Agilent Technologies go up and down completely randomly.

Pair Corralation between Xeris Pharmaceuticals and Agilent Technologies

Given the investment horizon of 90 days Xeris Pharmaceuticals is expected to under-perform the Agilent Technologies. In addition to that, Xeris Pharmaceuticals is 2.23 times more volatile than Agilent Technologies. It trades about -0.09 of its total potential returns per unit of risk. Agilent Technologies is currently generating about -0.06 per unit of volatility. If you would invest  14,263  in Agilent Technologies on March 2, 2024 and sell it today you would lose (1,121) from holding Agilent Technologies or give up 7.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Xeris Pharmaceuticals  vs.  Agilent Technologies

Xeris Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xeris Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Agilent Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agilent Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Xeris Pharmaceuticals and Agilent Technologies

The main advantage of trading using opposite Xeris Pharmaceuticals and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xeris Pharmaceuticals 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 Xeris Pharmaceuticals 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .