Correlation Between Agilent Technologies and B of A

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

Diversification Opportunities for Agilent Technologies and B of A

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Agilent and B of A is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Bank Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Of America 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 B of A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Of America has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and B of A go up and down completely randomly.

Pair Corralation between Agilent Technologies and B of A

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 1.2 times less return on investment than B of A. But when comparing it to its historical volatility, Agilent Technologies is 1.16 times less risky than B of A. It trades about 0.05 of its potential returns per unit of risk. Bank Of America is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,491  in Bank Of America on May 17, 2022 and sell it today you would earn a total of  1,121  from holding Bank Of America or generate 45.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Agilent Technologies  vs.  Bank Of America

 Performance (%) 
       Timeline  
Agilent Technologies 
Agilent Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Agilent Price Channel

Bank Of America 
B of A Performance
0 of 100
Over the last 90 days Bank Of America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, B of A is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

B of A Price Channel

Agilent Technologies and B of A Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Agilent Technologies and B of A

The main advantage of trading using opposite Agilent Technologies and B of A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, B of A 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 B of A will offset losses from the drop in B of A's long position.
The idea behind Agilent Technologies and Bank Of America 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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