Correlation Between Titan Machinery and International Consolidated

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

By analyzing existing cross correlation between Titan Machinery and International Consolidated Airlines, you can compare the effects of market volatilities on Titan Machinery and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and International Consolidated.

Diversification Opportunities for Titan Machinery and International Consolidated

0.2

Correlation Coefficient

Titan Machinery  International Consolidated

Modest diversification

The 3 months correlation between Titan and International is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Titan Machinery i.e., Titan Machinery and International Consolidated go up and down completely randomly.

Pair Corralation between Titan Machinery and International Consolidated

Assuming the 90 days horizon Titan Machinery is expected to under-perform the International Consolidated. In addition to that, Titan Machinery is 1.7 times more volatile than International Consolidated Airlines. It trades about -0.07 of its total potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.26 per unit of volatility. If you would invest  338.00  in International Consolidated Airlines on October 10, 2024 and sell it today you would earn a total of  25.00  from holding International Consolidated Airlines or generate 7.4% 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.  International Consolidated Air

Titan Machinery

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Titan Machinery may actually be approaching a critical reversion point that can send shares even higher in February 2025.

International Consolidated

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, International Consolidated reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Machinery and International Consolidated

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

The idea behind Titan Machinery and International Consolidated Airlines 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..