Correlation Between Velodyne Lidar and Agilent Technologies

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

Diversification Opportunities for Velodyne Lidar and Agilent Technologies

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Velodyne and Agilent is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Velodyne Lidar and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Velodyne Lidar 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 Velodyne Lidar 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 Velodyne Lidar i.e., Velodyne Lidar and Agilent Technologies go up and down completely randomly.

Pair Corralation between Velodyne Lidar and Agilent Technologies

Given the investment horizon of 90 days Velodyne Lidar is expected to generate 3.36 times more return on investment than Agilent Technologies. However, Velodyne Lidar is 3.36 times more volatile than Agilent Technologies. It trades about 0.03 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.06 per unit of risk. If you would invest  104.00  in Velodyne Lidar on July 7, 2022 and sell it today you would lose (2.00)  from holding Velodyne Lidar or give up 1.92% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Velodyne Lidar  vs.  Agilent Technologies

 Performance (%) 
       Timeline  
Velodyne Lidar 
Velodyne Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Velodyne Lidar are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental indicators, Velodyne Lidar reported solid returns over the last few months and may actually be approaching a breakup point.

Velodyne Price Channel

Agilent Technologies 
Agilent Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Agilent Price Channel

Velodyne Lidar and Agilent Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Velodyne Lidar and Agilent Technologies

The main advantage of trading using opposite Velodyne Lidar and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Velodyne Lidar 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.
Velodyne Lidar vs. Amazon Inc
The idea behind Velodyne Lidar 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.
Agilent Technologies 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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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