Correlation Between Agilent Technologies and Penn National

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

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

Diversification Opportunities for Agilent Technologies and Penn National

-0.07

Correlation Coefficient

Agilent Technologies  Penn National

Good diversification

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

Pair Corralation between Agilent Technologies and Penn National

Assuming the 90 days horizon Agilent Technologies is expected to generate 0.42 times more return on investment than Penn National. However, Agilent Technologies is 2.4 times less risky than Penn National. It trades about 0.0 of its potential returns per unit of risk. Penn National Gaming is currently generating about -0.16 per unit of risk. If you would invest  12,798  in Agilent Technologies on September 24, 2024 and sell it today you would lose (12.00) from holding Agilent Technologies or give up 0.09% of portfolio value over 90 days.

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

Agilent Technologies  vs.  Penn National Gaming

Agilent Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Agilent Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Penn National Gaming

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Penn National Gaming are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Penn National is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Agilent Technologies and Penn National

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

The idea behind Agilent Technologies and Penn National Gaming 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.