Correlation Between Agilent Technologies and American Express

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

Diversification Opportunities for Agilent Technologies and American Express

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Agilent and American is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express 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 American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and American Express go up and down completely randomly.

Pair Corralation between Agilent Technologies and American Express

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 1.11 times more return on investment than American Express. However, Agilent Technologies is 1.11 times more volatile than American Express. It trades about -0.05 of its potential returns per unit of risk. American Express is currently generating about -0.14 per unit of risk. If you would invest  13,361  in Agilent Technologies on July 6, 2022 and sell it today you would lose (723.00)  from holding Agilent Technologies or give up 5.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Agilent Technologies  vs.  American Express

 Performance (%) 
       Timeline  
Agilent Technologies 
Agilent Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 3 (%) 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

American Express 
American Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, American Express is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the insiders.

American Price Channel

Agilent Technologies and American Express Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Agilent Technologies and American Express

The main advantage of trading using opposite Agilent Technologies and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.
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The idea behind Agilent Technologies and American Express 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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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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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