Correlation Between Agilent Technologies and Charles River

Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and Charles River 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 Charles River into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agilent Technologies and Charles River Laboratories, you can compare the effects of market volatilities on Agilent Technologies and Charles River 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 Charles River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and Charles River.

Diversification Opportunities for Agilent Technologies and Charles River

0.2

Correlation Coefficient

Agilent Technologies  Charles River

Modest diversification

The 3 months correlation between Agilent and Charles is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Charles River Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles River Labora 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 Charles River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles River Labora has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Charles River go up and down completely randomly.

Pair Corralation between Agilent Technologies and Charles River

Taking into account the 90-day investment horizon Agilent Technologies is expected to under-perform the Charles River. But the stock apears to be less risky and, when comparing its historical volatility, Agilent Technologies is 1.56 times less risky than Charles River. The stock trades about -0.02 of its potential returns per unit of risk. The Charles River Laboratories is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  19,775  in Charles River Laboratories on August 30, 2024 and sell it today you would earn a total of  184.00  from holding Charles River Laboratories or generate 0.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Agilent Technologies  vs.  Charles River Laboratories

Agilent Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agilent Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Charles River Labora

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Charles River Laboratories are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Charles River is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Agilent Technologies and Charles River

The main advantage of trading using opposite Agilent Technologies and Charles River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, Charles River 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 Charles River will offset losses from the drop in Charles River's long position.

The idea behind Agilent Technologies and Charles River Laboratories 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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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 the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.