Correlation Between Roper Technologies and Agilent Technologies

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

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

Diversification Opportunities for Roper Technologies and Agilent Technologies

0.2

Correlation Coefficient

Roper Technologies  Agilent Technologies

Modest diversification

The 3 months correlation between Roper and Agilent is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Roper Technologies Common and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Roper 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 Roper Technologies Common 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 Roper Technologies i.e., Roper Technologies and Agilent Technologies go up and down completely randomly.

Pair Corralation between Roper Technologies and Agilent Technologies

Considering the 90-day investment horizon Roper Technologies Common is expected to generate 0.53 times more return on investment than Agilent Technologies. However, Roper Technologies Common is 1.87 times less risky than Agilent Technologies. It trades about -0.28 of its potential returns per unit of risk. Agilent Technologies is currently generating about -0.34 per unit of risk. If you would invest  55,330  in Roper Technologies Common on January 20, 2024 and sell it today you would lose (2,603) from holding Roper Technologies Common or give up 4.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Roper Technologies Common  vs.  Agilent Technologies

Roper Technologies Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roper Technologies Common has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Roper Technologies is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Agilent Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agilent Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Agilent Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Roper Technologies and Agilent Technologies

The main advantage of trading using opposite Roper Technologies and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roper Technologies 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 Roper Technologies Common 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.