Correlation Between Disney and Agilent Technologies

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

Diversification Opportunities for Disney and Agilent Technologies

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between Disney and Agilent is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Disney 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 Walt Disney 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 Disney i.e., Disney and Agilent Technologies go up and down completely randomly.

Pair Corralation between Disney and Agilent Technologies

Considering the 90-day investment horizon Walt Disney is expected to under-perform the Agilent Technologies. In addition to that, Disney is 1.43 times more volatile than Agilent Technologies. It trades about -0.01 of its total potential returns per unit of risk. Agilent Technologies is currently generating about 0.19 per unit of volatility. If you would invest  13,803  in Agilent Technologies on September 6, 2022 and sell it today you would earn a total of  1,493  from holding Agilent Technologies or generate 10.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Walt Disney  vs.  Agilent Technologies

 Performance (%) 
       Timeline  
Walt Disney 
Disney Performance
0 of 100
Over the last 90 days Walt Disney has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Disney Price Channel

Agilent Technologies 
Agilent Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Agilent Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Agilent Price Channel

Disney and Agilent Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Disney and Agilent Technologies

The main advantage of trading using opposite Disney and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney 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 Walt Disney 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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