Correlation Between Quest Diagnostics and Agilent Technologies

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

Diversification Opportunities for Quest Diagnostics and Agilent Technologies

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Quest and Agilent is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Quest Diagnostics and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Quest Diagnostics 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 Quest Diagnostics 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 Quest Diagnostics i.e., Quest Diagnostics and Agilent Technologies go up and down completely randomly.

Pair Corralation between Quest Diagnostics and Agilent Technologies

Considering the 90-day investment horizon Quest Diagnostics is expected to generate 0.74 times more return on investment than Agilent Technologies. However, Quest Diagnostics is 1.34 times less risky than Agilent Technologies. It trades about -0.1 of its potential returns per unit of risk. Agilent Technologies is currently generating about -0.15 per unit of risk. If you would invest  14,539  in Quest Diagnostics on March 28, 2022 and sell it today you would lose (508.00)  from holding Quest Diagnostics or give up 3.49% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Quest Diagnostics  vs.  Agilent Technologies

 Performance (%) 
      Timeline 
Quest Diagnostics 
Quest Performance
0 of 100
Over the last 90 days Quest Diagnostics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Quest Diagnostics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Quest Price Channel

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 latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0074
Payout Ratio
0.18
Last Split Factor
1398:1000
Forward Annual Dividend Rate
0.84
Dividend Date
2022-07-27
Ex Dividend Date
2022-07-01
Last Split Date
2014-11-03

Agilent Price Channel

Quest Diagnostics and Agilent Technologies Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Quest Diagnostics and Agilent Technologies

The main advantage of trading using opposite Quest Diagnostics and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quest Diagnostics 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 Quest Diagnostics 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.
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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