Correlation Between Oil Gas and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both Oil Gas 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 Oil Gas and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil Gas Ultrasector and Agilent Technologies, you can compare the effects of market volatilities on Oil Gas 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 Oil Gas with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Gas and Agilent Technologies.
Diversification Opportunities for Oil Gas and Agilent Technologies
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oil and Agilent is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Oil Gas Ultrasector and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Oil Gas 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 Oil Gas Ultrasector 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 Oil Gas i.e., Oil Gas and Agilent Technologies go up and down completely randomly.
Pair Corralation between Oil Gas and Agilent Technologies
Assuming the 90 days horizon Oil Gas Ultrasector is expected to generate 0.9 times more return on investment than Agilent Technologies. However, Oil Gas Ultrasector is 1.11 times less risky than Agilent Technologies. It trades about 0.28 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.04 per unit of risk. If you would invest 3,252 in Oil Gas Ultrasector on January 24, 2024 and sell it today you would earn a total of 838.00 from holding Oil Gas Ultrasector or generate 25.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil Gas Ultrasector vs. Agilent Technologies
Performance |
| Timeline |
| Oil Gas Ultrasector |
| Agilent Technologies |
Oil Gas and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil Gas and Agilent Technologies
The main advantage of trading using opposite Oil Gas and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Gas 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.| Oil Gas vs. Ultramid Cap Profund Ultramid Cap | Oil Gas vs. Precious Metals Ultrasector | Oil Gas vs. Real Estate Ultrasector | Oil Gas vs. Fidelity Advisor Energy |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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