Correlation Between Titan Machinery and Barrick Gold

Can any of the company-specific risk be diversified away by investing in both Titan Machinery and Barrick Gold 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 Titan Machinery and Barrick Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Titan Machinery and Barrick Gold

0.32

Correlation Coefficient

Titan Machinery  Barrick Gold

Weak diversification

The 3 months correlation between Titan and Barrick is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Barrick Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrick Gold and Titan Machinery 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 Titan Machinery are associated (or correlated) with Barrick Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrick Gold has no effect on the direction of Titan Machinery i.e., Titan Machinery and Barrick Gold go up and down completely randomly.

Pair Corralation between Titan Machinery and Barrick Gold

Assuming the 90 days horizon Titan Machinery is expected to generate 3.23 times less return on investment than Barrick Gold. In addition to that, Titan Machinery is 1.8 times more volatile than Barrick Gold. It trades about 0.03 of its total potential returns per unit of risk. Barrick Gold is currently generating about 0.17 per unit of volatility. If you would invest  1,481  in Barrick Gold on December 20, 2024 and sell it today you would earn a total of  289.00  from holding Barrick Gold or generate 19.51% return on investment over 90 days.

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

Titan Machinery  vs.  Barrick Gold

Titan Machinery

Risk-Adjusted Performance

Weak

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

Barrick Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Barrick Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Machinery and Barrick Gold

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

The idea behind Titan Machinery and Barrick Gold 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.