Correlation Between Agilent Technologies and NorthWestern
Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and NorthWestern 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 NorthWestern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilent Technologies and NorthWestern, you can compare the effects of market volatilities on Agilent Technologies and NorthWestern 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 NorthWestern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and NorthWestern.
Diversification Opportunities for Agilent Technologies and NorthWestern
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Agilent and NorthWestern is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and NorthWestern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorthWestern 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 NorthWestern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorthWestern has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and NorthWestern go up and down completely randomly.
Pair Corralation between Agilent Technologies and NorthWestern
Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 1.7 times less return on investment than NorthWestern. In addition to that, Agilent Technologies is 1.33 times more volatile than NorthWestern. It trades about 0.01 of its total potential returns per unit of risk. NorthWestern is currently generating about 0.01 per unit of volatility. If you would invest 4,921 in NorthWestern on January 24, 2024 and sell it today you would earn a total of 119.00 from holding NorthWestern or generate 2.42% 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. NorthWestern
Performance |
| Timeline |
| Agilent Technologies |
| NorthWestern |
Agilent Technologies and NorthWestern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agilent Technologies and NorthWestern
The main advantage of trading using opposite Agilent Technologies and NorthWestern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, NorthWestern 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 NorthWestern will offset losses from the drop in NorthWestern's long position.| Agilent Technologies vs. Nuvation Bio | Agilent Technologies vs. Lyell Immunopharma | Agilent Technologies vs. Century Therapeutics | Agilent Technologies vs. Generation BioCo |
| NorthWestern vs. Allete Inc | NorthWestern vs. Black Hills | NorthWestern vs. Otter Tail | NorthWestern vs. Companhia Paranaense de |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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