Correlation Between Quest Diagnostics and Agilent Technologies

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Can any of the company-specific risk be diversified away by investing in both Quest Diagnostics 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 Quest Diagnostics and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quest Diagnostics Incorporated and Agilent Technologies, you can compare the effects of market volatilities on Quest Diagnostics 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 Quest Diagnostics with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quest Diagnostics and Agilent Technologies.

Diversification Opportunities for Quest Diagnostics and Agilent Technologies

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between Quest and Agilent is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Quest Diagnostics Incorporated and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Quest Diagnostics 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 Quest Diagnostics Incorporated 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 Quest Diagnostics i.e., Quest Diagnostics and Agilent Technologies go up and down completely randomly.

Pair Corralation between Quest Diagnostics and Agilent Technologies

Considering the 90-day investment horizon Quest Diagnostics is expected to generate 2.94 times less return on investment than Agilent Technologies. But when comparing it to its historical volatility, Quest Diagnostics Incorporated is 1.5 times less risky than Agilent Technologies. It trades about 0.18 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  13,255  in Agilent Technologies on December 29, 2023 and sell it today you would earn a total of  1,482  from holding Agilent Technologies or generate 11.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Quest Diagnostics Incorporated  vs.  Agilent Technologies

 Performance 
       Timeline  
Quest Diagnostics 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Quest Diagnostics Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Quest Diagnostics is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
Agilent Technologies 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Quest Diagnostics and Agilent Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Quest Diagnostics and Agilent Technologies

The main advantage of trading using opposite Quest Diagnostics and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quest Diagnostics 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 Quest Diagnostics Incorporated 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.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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