Correlation Between Danaher Corp and Agilent Technologies

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

Diversification Opportunities for Danaher Corp and Agilent Technologies

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Danaher and Agilent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Danaher Corp and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Danaher Corp 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 Danaher Corp 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 Danaher Corp i.e., Danaher Corp and Agilent Technologies go up and down completely randomly.

Pair Corralation between Danaher Corp and Agilent Technologies

Considering the 90-day investment horizon Danaher Corp is expected to generate 1.24 times less return on investment than Agilent Technologies. But when comparing it to its historical volatility, Danaher Corp is 1.03 times less risky than Agilent Technologies. It trades about 0.02 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  13,667  in Agilent Technologies on August 28, 2022 and sell it today you would earn a total of  2,029  from holding Agilent Technologies or generate 14.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Danaher Corp  vs.  Agilent Technologies

 Performance (%) 
       Timeline  
Danaher Corp 
Danaher Performance
0 of 100
Over the last 90 days Danaher Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Danaher Corp is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Danaher Price Channel

Agilent Technologies 
Agilent Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Agilent Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Agilent Price Channel

Danaher Corp and Agilent Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Danaher Corp and Agilent Technologies

The main advantage of trading using opposite Danaher Corp and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danaher Corp 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 Danaher Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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