Correlation Between Agilent Technologies and Berkeley Lights

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

Diversification Opportunities for Agilent Technologies and Berkeley Lights

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Agilent and Berkeley is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Berkeley Lights in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Berkeley Lights 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 Berkeley Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkeley Lights has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Berkeley Lights go up and down completely randomly.

Pair Corralation between Agilent Technologies and Berkeley Lights

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 0.29 times more return on investment than Berkeley Lights. However, Agilent Technologies is 3.44 times less risky than Berkeley Lights. It trades about 0.05 of its potential returns per unit of risk. Berkeley Lights is currently generating about -0.08 per unit of risk. If you would invest  8,562  in Agilent Technologies on February 17, 2022 and sell it today you would earn a total of  3,746  from holding Agilent Technologies or generate 43.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy93.17%
ValuesDaily Returns

Agilent Technologies  vs.  Berkeley Lights

 Performance (%) 
      Timeline 
Agilent Technologies 
Agilent Performance
0 of 100
Over the last 90 days Agilent Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Agilent Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Agilent Price Channel

Berkeley Lights 
Berkeley Performance
0 of 100
Over the last 90 days Berkeley Lights has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Berkeley Price Channel

Agilent Technologies and Berkeley Lights Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Agilent Technologies and Berkeley Lights

The main advantage of trading using opposite Agilent Technologies and Berkeley Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, Berkeley Lights 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 Berkeley Lights will offset losses from the drop in Berkeley Lights' long position.
The idea behind Agilent Technologies and Berkeley Lights 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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