Correlation Between Agilent Technologies and Cable One

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

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

Diversification Opportunities for Agilent Technologies and Cable One

0.07

Correlation Coefficient

Agilent Technologies  Cable One

Significant diversification

The 3 months correlation between Agilent and Cable is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One 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 Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Cable One go up and down completely randomly.

Pair Corralation between Agilent Technologies and Cable One

Assuming the 90 days trading horizon Agilent Technologies is expected to generate 87.32 times less return on investment than Cable One. But when comparing it to its historical volatility, Agilent Technologies is 18.82 times less risky than Cable One. It trades about 0.11 of its potential returns per unit of risk. Cable One is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest  1,044  in Cable One on September 4, 2024 and sell it today you would earn a total of  200.00  from holding Cable One or generate 19.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Agilent Technologies  vs.  Cable One

Agilent Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cable One

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cable One are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cable One sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agilent Technologies and Cable One

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

The idea behind Agilent Technologies and Cable One 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.