Correlation Between Agilent Technologies and CVS Corp

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

Diversification Opportunities for Agilent Technologies and CVS Corp

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Agilent and CVS Corp is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and CVS Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS 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 CVS Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Corp has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and CVS Corp go up and down completely randomly.

Pair Corralation between Agilent Technologies and CVS Corp

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 2.71 times less return on investment than CVS Corp. In addition to that, Agilent Technologies is 1.14 times more volatile than CVS Corp. It trades about 0.02 of its total potential returns per unit of risk. CVS Corp is currently generating about 0.06 per unit of volatility. If you would invest  6,551  in CVS Corp on July 2, 2022 and sell it today you would earn a total of  3,147  from holding CVS Corp or generate 48.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Agilent Technologies  vs.  CVS Corp

 Performance (%) 
       Timeline  
Agilent Technologies 
Agilent Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 1 (%) 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

CVS Corp 
CVS Corp Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in CVS Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, CVS Corp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

CVS Corp Price Channel

Agilent Technologies and CVS Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Agilent Technologies and CVS Corp

The main advantage of trading using opposite Agilent Technologies and CVS Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, CVS Corp 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 CVS Corp will offset losses from the drop in CVS Corp's long position.
Agilent Technologies vs. Amazon Inc
The idea behind Agilent Technologies and CVS 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.
CVS Corp vs. Amazon Inc
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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