Correlation Between M2i Global and Agilent Technologies

Can any of the company-specific risk be diversified away by investing in both M2i Global 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 M2i Global and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between M2i Global and Agilent Technologies, you can compare the effects of market volatilities on M2i Global 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 M2i Global with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of M2i Global and Agilent Technologies.

Diversification Opportunities for M2i Global and Agilent Technologies

-0.14

Correlation Coefficient

M2i Global  Agilent Technologies

Good diversification

The 3 months correlation between M2i and Agilent is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding M2i Global and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and M2i Global 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 M2i Global 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 M2i Global i.e., M2i Global and Agilent Technologies go up and down completely randomly.

Pair Corralation between M2i Global and Agilent Technologies

Given the investment horizon of 90 days M2i Global is expected to generate 33.85 times more return on investment than Agilent Technologies. However, M2i Global is 33.85 times more volatile than Agilent Technologies. It trades about 0.16 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.33 per unit of risk. If you would invest  40.00  in M2i Global on February 26, 2024 and sell it today you would earn a total of  10.00  from holding M2i Global or generate 25.0% return on investment over 90 days.

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

M2i Global  vs.  Agilent Technologies

M2i Global

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in M2i Global are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, M2i Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Agilent Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Agilent Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with M2i Global and Agilent Technologies

The main advantage of trading using opposite M2i Global and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M2i Global 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 M2i Global 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 the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.