Correlation Between American Express and Agilent Technologies

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

Diversification Opportunities for American Express and Agilent Technologies

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between American and Agilent is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and American Express 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 American Express 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 American Express i.e., American Express and Agilent Technologies go up and down completely randomly.

Pair Corralation between American Express and Agilent Technologies

Considering the 90-day investment horizon American Express is expected to under-perform the Agilent Technologies. In addition to that, American Express is 1.23 times more volatile than Agilent Technologies. It trades about -0.2 of its total potential returns per unit of risk. Agilent Technologies is currently generating about -0.09 per unit of volatility. If you would invest  12,828  in Agilent Technologies on July 1, 2022 and sell it today you would lose (456.00)  from holding Agilent Technologies or give up 3.55% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

American Express  vs.  Agilent Technologies

 Performance (%) 
       Timeline  
American Express 
American Performance
0 of 100
Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. 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 
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

American Express and Agilent Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Express and Agilent Technologies

The main advantage of trading using opposite American Express and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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.
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The idea behind American Express 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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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 CEO Directory module to screen CEOs from public companies around the world.

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