Correlation Between ATT and Agilent Technologies

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

Diversification Opportunities for ATT and Agilent Technologies

0.76
  Correlation Coefficient

Poor diversification

The 12 months correlation between ATT and Agilent is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and ATT 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 ATT Inc 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 ATT i.e., ATT and Agilent Technologies go up and down completely randomly.

Pair Corralation between ATT and Agilent Technologies

Taking into account the 90-day investment horizon ATT Inc is expected to under-perform the Agilent Technologies. But the stock apears to be less risky and, when comparing its historical volatility, ATT Inc is 1.28 times less risky than Agilent Technologies. The stock trades about -0.2 of its potential returns per unit of risk. The Agilent Technologies is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  13,297  in Agilent Technologies on December 4, 2023 and sell it today you would earn a total of  609.00  from holding Agilent Technologies or generate 4.58% return on investment over 90 days.
Time Period12 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

ATT Inc  vs.  Agilent Technologies

 Performance 
       Timeline  
ATT Inc 

Risk-Adjusted Performance

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Weak
Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ATT is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Agilent Technologies 

Risk-Adjusted Performance

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Low
 
High
Modest
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.

ATT and Agilent Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATT and Agilent Technologies

The main advantage of trading using opposite ATT and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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 ATT Inc 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.

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