Correlation Between Meta Platforms and Agilent Technologies

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

Diversification Opportunities for Meta Platforms and Agilent Technologies

  Correlation Coefficient

Excellent diversification

The 3 months correlation between Meta Platforms and Agilent is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Meta Platforms 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 Meta Platforms 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 Meta Platforms i.e., Meta Platforms and Agilent Technologies go up and down completely randomly.

Pair Corralation between Meta Platforms and Agilent Technologies

Given the investment horizon of 90 days Meta Platforms is expected to generate 1.42 times more return on investment than Agilent Technologies. However, Meta Platforms is 1.42 times more volatile than Agilent Technologies. It trades about 0.33 of its potential returns per unit of risk. Agilent Technologies is currently generating about -0.14 per unit of risk. If you would invest  16,954  in Meta Platforms on December 29, 2022 and sell it today you would earn a total of  3,581  from holding Meta Platforms or generate 21.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Meta Platforms  vs.  Agilent Technologies

 Performance (%) 
Meta Platforms 

Meta Platforms Performance

19 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Meta Platforms sustained solid returns over the last few months and may actually be approaching a breakup point.
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 abnormal 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.

Meta Platforms and Agilent Technologies Volatility Contrast

   Predicted Return Density   

Pair Trading with Meta Platforms and Agilent Technologies

The main advantage of trading using opposite Meta Platforms and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms 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.
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The idea behind Meta Platforms 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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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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