Correlation Between Agilent Technologies and Xencor

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

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

Diversification Opportunities for Agilent Technologies and Xencor

-0.47

Correlation Coefficient

Agilent Technologies  Xencor

Very good diversification

The 3 months correlation between Agilent and Xencor is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Xencor Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xencor Inc 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 Xencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xencor Inc has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Xencor go up and down completely randomly.

Pair Corralation between Agilent Technologies and Xencor

Taking into account the 90-day investment horizon Agilent Technologies is expected to under-perform the Xencor. But the stock apears to be less risky and, when comparing its historical volatility, Agilent Technologies is 1.79 times less risky than Xencor. The stock trades about -0.01 of its potential returns per unit of risk. The Xencor Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,850  in Xencor Inc on September 3, 2024 and sell it today you would lose (290.00) from holding Xencor Inc or give up 10.18% of portfolio value over 90 days.

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

Agilent Technologies  vs.  Xencor Inc

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.

Xencor Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xencor Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Xencor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agilent Technologies and Xencor

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

The idea behind Agilent Technologies and Xencor Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.