Correlation Between Agilent Technologies and Salesforce

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

Diversification Opportunities for Agilent Technologies and Salesforce

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Agilent and Salesforce is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce 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 Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Salesforce go up and down completely randomly.

Pair Corralation between Agilent Technologies and Salesforce

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 0.74 times more return on investment than Salesforce. However, Agilent Technologies is 1.35 times less risky than Salesforce. It trades about 0.04 of its potential returns per unit of risk. Salesforce is currently generating about -0.03 per unit of risk. If you would invest  11,637  in Agilent Technologies on September 10, 2022 and sell it today you would earn a total of  3,658  from holding Agilent Technologies or generate 31.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Agilent Technologies  vs.  Salesforce

 Performance (%) 
       Timeline  
Agilent Technologies 
Agilent Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Agilent Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Agilent Price Channel

Salesforce 
Salesforce Performance
0 of 100
Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. Even with sluggish performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in January 2023. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Salesforce Price Channel

Agilent Technologies and Salesforce Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Agilent Technologies and Salesforce

The main advantage of trading using opposite Agilent Technologies and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, Salesforce 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 Salesforce will offset losses from the drop in Salesforce's long position.
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The idea behind Agilent Technologies and Salesforce 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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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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