Correlation Between Ventyx Biosciences and Agilent Technologies

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

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

Diversification Opportunities for Ventyx Biosciences and Agilent Technologies

0.14

Correlation Coefficient

Ventyx Biosciences  Agilent Technologies

Average diversification

The 3 months correlation between Ventyx and Agilent is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ventyx Biosciences and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Ventyx Biosciences 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 Ventyx Biosciences are associated (or correlated) with Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Ventyx Biosciences i.e., Ventyx Biosciences and Agilent Technologies go up and down completely randomly.

Pair Corralation between Ventyx Biosciences and Agilent Technologies

Given the investment horizon of 90 days Ventyx Biosciences is expected to generate 5.87 times more return on investment than Agilent Technologies. However, Ventyx Biosciences is 5.87 times more volatile than Agilent Technologies. It trades about 0.1 of its potential returns per unit of risk. Agilent Technologies is currently generating about 0.33 per unit of risk. If you would invest  393.00  in Ventyx Biosciences on February 26, 2024 and sell it today you would earn a total of  44.00  from holding Ventyx Biosciences or generate 11.2% return on investment over 90 days.

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

Ventyx Biosciences  vs.  Agilent Technologies

Ventyx Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ventyx Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Agilent Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Agilent Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ventyx Biosciences and Agilent Technologies

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

The idea behind Ventyx Biosciences and Agilent Technologies 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.