Correlation Between Agilent Technologies and Twitter

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

Diversification Opportunities for Agilent Technologies and Twitter

0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between Agilent and Twitter is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Twitter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twitter 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 Twitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twitter has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Twitter go up and down completely randomly.

Pair Corralation between Agilent Technologies and Twitter

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 31.25 times less return on investment than Twitter. But when comparing it to its historical volatility, Agilent Technologies is 2.52 times less risky than Twitter. It trades about 0.02 of its potential returns per unit of risk. Twitter is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  3,865  in Twitter on July 6, 2022 and sell it today you would earn a total of  1,335  from holding Twitter or generate 34.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Agilent Technologies  vs.  Twitter

 Performance (%) 
       Timeline  
Agilent Technologies 
Agilent Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Agilent Price Channel

Twitter 
Twitter Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Twitter are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Twitter reported solid returns over the last few months and may actually be approaching a breakup point.

Twitter Price Channel

Agilent Technologies and Twitter Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Agilent Technologies and Twitter

The main advantage of trading using opposite Agilent Technologies and Twitter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, Twitter 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 Twitter will offset losses from the drop in Twitter's long position.
Agilent Technologies vs. Amazon Inc
The idea behind Agilent Technologies and Twitter 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.
Twitter vs. Tencent Holdings
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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