Correlation Between Agilent Technologies and Microsoft Corp

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

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

Diversification Opportunities for Agilent Technologies and Microsoft Corp

-0.24
  Correlation Coefficient
Agilent Technologies
Microsoft Corp

Very good diversification

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

Pair Corralation between Agilent Technologies and Microsoft Corp

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 1.31 times less return on investment than Microsoft Corp. But when comparing it to its historical volatility, Agilent Technologies is 1.01 times less risky than Microsoft Corp. It trades about 0.11 of its potential returns per unit of risk. Microsoft Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  20,494  in Microsoft Corp on August 30, 2021 and sell it today you would earn a total of  12,474  from holding Microsoft Corp or generate 60.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Agilent Technologies  vs.  Microsoft Corp

 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 sluggish performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2021. The current disturbance may also be a sign of long term up-swing for the company investors.

Agilent Price Channel

Microsoft Corp 
Microsoft Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft Corp may actually be approaching a critical reversion point that can send shares even higher in December 2021.

Microsoft Price Channel

Agilent Technologies and Microsoft Corp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Agilent Technologies and Microsoft Corp

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

Microsoft Corp

Pair trading matchups for Microsoft Corp

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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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