Correlation Between Agilent Technologies and Thermo Fisher

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

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

Diversification Opportunities for Agilent Technologies and Thermo Fisher

0.85

Correlation Coefficient

Agilent Technologies  Thermo Fisher

Very poor diversification

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

Pair Corralation between Agilent Technologies and Thermo Fisher

Taking into account the 90-day investment horizon Agilent Technologies is expected to under-perform the Thermo Fisher. In addition to that, Agilent Technologies is 1.14 times more volatile than Thermo Fisher Scientific. It trades about -0.08 of its total potential returns per unit of risk. Thermo Fisher Scientific is currently generating about -0.08 per unit of volatility. If you would invest  58,920  in Thermo Fisher Scientific on February 9, 2024 and sell it today you would lose (1,556) from holding Thermo Fisher Scientific or give up 2.64% of portfolio value over 90 days.

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

Agilent Technologies  vs.  Thermo Fisher Scientific

Agilent Technologies

Risk-Adjusted Performance

6 of 100

Modest

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 weak basic indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Thermo Fisher Scientific

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thermo Fisher Scientific are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Thermo Fisher is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Agilent Technologies and Thermo Fisher

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

The idea behind Agilent Technologies and Thermo Fisher Scientific 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 the Fundamental Analysis module to view fundamental data based on most recent published financial statements.