Correlation Between Agilent Technologies and Lumos Pharma

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

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

Diversification Opportunities for Agilent Technologies and Lumos Pharma

-0.66

Correlation Coefficient

Agilent Technologies  Lumos Pharma

Excellent diversification

The 3 months correlation between Agilent and Lumos is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Lumos Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumos Pharma 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 Lumos Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumos Pharma has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Lumos Pharma go up and down completely randomly.

Pair Corralation between Agilent Technologies and Lumos Pharma

Taking into account the 90-day investment horizon Agilent Technologies is expected to under-perform the Lumos Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Agilent Technologies is 2.8 times less risky than Lumos Pharma. The stock trades about 0.0 of its potential returns per unit of risk. The Lumos Pharma is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  327.00  in Lumos Pharma on September 4, 2024 and sell it today you would earn a total of  111.00  from holding Lumos Pharma or generate 33.94% return on investment over 90 days.

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

Agilent Technologies  vs.  Lumos Pharma

Agilent Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 1 (%) 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.

Lumos Pharma

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lumos Pharma are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting primary indicators, Lumos Pharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agilent Technologies and Lumos Pharma

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

The idea behind Agilent Technologies and Lumos Pharma 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.

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 the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.