Correlation Between Agilent Technologies and Exxon

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

Diversification Opportunities for Agilent Technologies and Exxon

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Agilent and Exxon is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp and Agilent 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 Agilent Technologies are associated (or correlated) with Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Exxon go up and down completely randomly.

Pair Corralation between Agilent Technologies and Exxon

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 4.82 times less return on investment than Exxon. But when comparing it to its historical volatility, Agilent Technologies is 1.28 times less risky than Exxon. It trades about 0.03 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,161  in Exxon Mobil Corp on July 1, 2022 and sell it today you would earn a total of  5,631  from holding Exxon Mobil Corp or generate 178.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Agilent Technologies  vs.  Exxon Mobil Corp

 Performance (%) 
       Timeline  
Agilent Technologies 
Agilent Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Agilent Price Channel

Exxon Mobil Corp 
Exxon Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Exxon is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Exxon Price Channel

Agilent Technologies and Exxon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Agilent Technologies and Exxon

The main advantage of trading using opposite Agilent Technologies and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.
Agilent Technologies vs. Amazon Inc
The idea behind Agilent Technologies and Exxon Mobil Corp 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.
Exxon vs. Chevron Corp
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 Price Transformation module to use Price Transformation models to analyze depth of different equity instruments across global markets.

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