Correlation Between Agilent Technologies and Intuitive Surgical

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

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

Diversification Opportunities for Agilent Technologies and Intuitive Surgical

0.59

Correlation Coefficient

Agilent Technologies  Intuitive Surgical

Very weak diversification

The 3 months correlation between Agilent and Intuitive is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and Intuitive Surgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Surgical 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 Intuitive Surgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Surgical has no effect on the direction of Agilent Technologies i.e., Agilent Technologies and Intuitive Surgical go up and down completely randomly.

Pair Corralation between Agilent Technologies and Intuitive Surgical

Taking into account the 90-day investment horizon Agilent Technologies is expected to generate 2.25 times less return on investment than Intuitive Surgical. But when comparing it to its historical volatility, Agilent Technologies is 1.11 times less risky than Intuitive Surgical. It trades about 0.03 of its potential returns per unit of risk. Intuitive Surgical is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  21,087  in Intuitive Surgical on January 31, 2024 and sell it today you would earn a total of  16,327  from holding Intuitive Surgical or generate 77.43% return on investment over 90 days.

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

Agilent Technologies  vs.  Intuitive Surgical

Agilent Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Intuitive Surgical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intuitive Surgical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Intuitive Surgical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Agilent Technologies and Intuitive Surgical

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

The idea behind Agilent Technologies and Intuitive Surgical 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.