Correlation Between Brainsway and Agilent Technologies

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

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

Diversification Opportunities for Brainsway and Agilent Technologies

-0.28

Correlation Coefficient

Brainsway  Agilent Technologies

Very good diversification

The 3 months correlation between Brainsway and Agilent is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Brainsway and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Brainsway 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 Brainsway are associated (or correlated) with Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Brainsway i.e., Brainsway and Agilent Technologies go up and down completely randomly.

Pair Corralation between Brainsway and Agilent Technologies

Given the investment horizon of 90 days Brainsway is expected to under-perform the Agilent Technologies. In addition to that, Brainsway is 1.72 times more volatile than Agilent Technologies. It trades about -0.11 of its total potential returns per unit of risk. Agilent Technologies is currently generating about -0.14 per unit of volatility. If you would invest  14,532  in Agilent Technologies on January 25, 2024 and sell it today you would lose (783.00) from holding Agilent Technologies or give up 5.39% of portfolio value over 90 days.

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

Brainsway  vs.  Agilent Technologies

Brainsway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brainsway has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Agilent Technologies

Risk-Adjusted Performance

5 of 100

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

Pair Trading with Brainsway and Agilent Technologies

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

The idea behind Brainsway and Agilent Technologies 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.