Correlation Between Agilent Technologies and Guardant Health

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

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

Diversification Opportunities for Agilent Technologies and Guardant Health

-0.6

Correlation Coefficient

Agilent Technologies  Guardant Health

Excellent diversification

The 3 months correlation between Agilent and Guardant is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Guardant Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardant Health 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 Guardant Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardant Health has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Guardant Health go up and down completely randomly.

Pair Corralation between Agilent Technologies and Guardant Health

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 0.44 times more return on investment than Guardant Health. However, Agilent Technologies is 2.27 times less risky than Guardant Health. It trades about 0.01 of its potential returns per unit of risk. Guardant Health is currently generating about -0.01 per unit of risk. If you would invest  13,510  in Agilent Technologies on January 26, 2024 and sell it today you would earn a total of  239.00  from holding Agilent Technologies or generate 1.77% return on investment over 90 days.

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

Agilent Technologies  vs.  Guardant Health

Agilent Technologies

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Guardant Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardant Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Agilent Technologies and Guardant Health

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

The idea behind Agilent Technologies and Guardant Health 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 CEOs Directory module to screen CEOs from public companies around the world.