Correlation Between Agilent Technologies and VBI Vaccines

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

Diversification Opportunities for Agilent Technologies and VBI Vaccines

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Agilent and VBI is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and VBI Vaccines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VBI Vaccines 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 VBI Vaccines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VBI Vaccines has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and VBI Vaccines go up and down completely randomly.

Pair Corralation between Agilent Technologies and VBI Vaccines

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 0.52 times more return on investment than VBI Vaccines. However, Agilent Technologies is 1.92 times less risky than VBI Vaccines. It trades about 0.36 of its potential returns per unit of risk. VBI Vaccines is currently generating about 0.07 per unit of risk. If you would invest  13,255  in Agilent Technologies on December 29, 2023 and sell it today you would earn a total of  1,482  from holding Agilent Technologies or generate 11.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Agilent Technologies  vs.  VBI Vaccines

 Performance 
       Timeline  
Agilent Technologies 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
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 unfluctuating basic indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2024.
VBI Vaccines 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days VBI Vaccines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, VBI Vaccines is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Agilent Technologies and VBI Vaccines Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Agilent Technologies and VBI Vaccines

The main advantage of trading using opposite Agilent Technologies and VBI Vaccines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, VBI Vaccines 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 VBI Vaccines will offset losses from the drop in VBI Vaccines' long position.
The idea behind Agilent Technologies and VBI Vaccines 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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