Correlation Between Agilent Technologies and Adverum Biotechnologies

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

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

Diversification Opportunities for Agilent Technologies and Adverum Biotechnologies

-0.24

Correlation Coefficient

Agilent Technologies  Adverum Biotechnologies

Very good diversification

The 3 months correlation between Agilent and Adverum is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Adverum Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adverum Biotechnologies 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 Adverum Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adverum Biotechnologies has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Adverum Biotechnologies go up and down completely randomly.

Pair Corralation between Agilent Technologies and Adverum Biotechnologies

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 0.37 times more return on investment than Adverum Biotechnologies. However, Agilent Technologies is 2.69 times less risky than Adverum Biotechnologies. It trades about 0.14 of its potential returns per unit of risk. Adverum Biotechnologies is currently generating about -0.27 per unit of risk. If you would invest  13,210  in Agilent Technologies on February 11, 2024 and sell it today you would earn a total of  1,766  from holding Agilent Technologies or generate 13.37% return on investment over 90 days.

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

Agilent Technologies  vs.  Adverum Biotechnologies

Agilent Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Agilent Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Adverum Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adverum Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Agilent Technologies and Adverum Biotechnologies

The main advantage of trading using opposite Agilent Technologies and Adverum Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, Adverum Biotechnologies 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 Adverum Biotechnologies will offset losses from the drop in Adverum Biotechnologies' long position.

The idea behind Agilent Technologies and Adverum Biotechnologies 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..