Correlation Between Agilent Technologies and Curtiss Wright

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Can any of the company-specific risk be diversified away by investing in both Agilent Technologies and Curtiss Wright 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 Curtiss Wright into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agilent Technologies and Curtiss Wright, you can compare the effects of market volatilities on Agilent Technologies and Curtiss Wright 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 Curtiss Wright. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agilent Technologies and Curtiss Wright.

Diversification Opportunities for Agilent Technologies and Curtiss Wright

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Agilent and Curtiss is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Curtiss-Wright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss-Wright 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 Curtiss Wright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curtiss-Wright has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Curtiss Wright go up and down completely randomly.

Pair Corralation between Agilent Technologies and Curtiss Wright

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 1.04 times less return on investment than Curtiss Wright. In addition to that, Agilent Technologies is 1.66 times more volatile than Curtiss Wright. It trades about 0.08 of its total potential returns per unit of risk. Curtiss Wright is currently generating about 0.15 per unit of volatility. If you would invest  20,742  in Curtiss Wright on December 29, 2023 and sell it today you would earn a total of  4,852  from holding Curtiss Wright or generate 23.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Agilent Technologies  vs.  Curtiss-Wright

 Performance 
       Timeline  
Agilent Technologies 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 4 (%) 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 recent stock price disturbance, may contribute to short-term losses for the investors.
Curtiss-Wright 

Risk-Adjusted Performance

20 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Curtiss Wright are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Curtiss Wright showed solid returns over the last few months and may actually be approaching a breakup point.

Agilent Technologies and Curtiss Wright Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Agilent Technologies and Curtiss Wright

The main advantage of trading using opposite Agilent Technologies and Curtiss Wright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies position performs unexpectedly, Curtiss Wright 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 Curtiss Wright will offset losses from the drop in Curtiss Wright's long position.
The idea behind Agilent Technologies and Curtiss Wright 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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