Correlation Between WellCare Health and Agilent Technologies

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

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

Diversification Opportunities for WellCare Health and Agilent Technologies

0.0

Correlation Coefficient

WellCare Health  Agilent Technologies

Pay attention - limited upside

The 3 months correlation between WellCare and Agilent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WellCare Health Plans and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and WellCare Health 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 WellCare Health Plans 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 WellCare Health i.e., WellCare Health and Agilent Technologies go up and down completely randomly.

Pair Corralation between WellCare Health and Agilent Technologies

If you would invest (100.00) in WellCare Health Plans on March 7, 2024 and sell it today you would earn a total of  100.00  from holding WellCare Health Plans or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

WellCare Health Plans  vs.  Agilent Technologies

WellCare Health Plans

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WellCare Health Plans has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, WellCare Health is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 latest weak 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.

Pair Trading with WellCare Health and Agilent Technologies

The main advantage of trading using opposite WellCare Health and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WellCare Health 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 WellCare Health Plans 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.